1/31/2024 0 Comments Pocket billiards bank shots![]() on the Asian Development Bank board and heads the global investment advisory firm Chartwell Partners (pool is the most well-known and prevalent pool game type, which is played with 15 object balls, separated into groups of solid and striped balls, and one black 8-ball. The Bank of Boston was a terrific barometer of the New England economy, but bad loans in Argentina and Brazil humbled America's second-oldest bank, and its depressed stock price made it an easy takeover target.Ĭarl Delfeld represented the U.S. Some of the greatest investors and billiards players have been lateral thinkers looking for the soft bank shot. Looking for a safe way to profit from China's huge appetite for commodities? How about the Australia iShare (EWA), which is up 20% during the last 12 months? Seeking a well-regulated and liquid market to tap the low-cost advantage of eastern Europe? You might consider investing in the Austria iShare (EWO), up 33%. If not with bank proxies, how to play countries? The growth of exchange-traded funds (ETFs) offers many new choices to invest indirectly in promising countries or sectors. This turns out to be a better play on global growth in financial services and earnings diversification. RBS' high-profile $1.6 billion investment in the Bank of China is the best deal negotiated so far by a foreign entity in China's big four state-owned banks. One example: The bank's S&P AA- credit ranking gives it a funding advantage over other major banks in Australia. operations and its small but well-publicized Asia-Pacific operations are growing at a nice clip. ![]() operations has declined from 85% in 2000 to 60% in 2005. You would think that this would make it a great proxy for the market there (for better or worse), but this is not so true.ĭespite the NatWest acquisition, the percentage of net operating profit coming from U.K. The RBS Group now controls 9% of all savings accounts, 11% of personal loans, 28% of all small-business relationships and 14% of all credit cards in the U.K. ![]() Meantime, the Royal Bank of Scotland (RBS), with its acquisition of National Westminster (NatWest) in 2000, strengthened its position as the second-largest bank in the U.K. It's time to take some profits even if you still like Chile's long-term economic outlook. Perhaps too good a proxy, since at 20 times 2005 earnings, its share price of just over $40 is a bit rich right now. It would have been a smart and profitable move for investors to bet on Banco Santander as a proxy for Chile's promising economy. So far this year Chile's stock market is up 16.8%, Banco Santander's ADR 20%. In 2004 the Chile MSCI index was up 24.5%, the Banco Santander ADR 43%. Let's see how its stock price compares with the performance of the Chilean stock market. It is well managed, with a cost-to-income ratio of only 44%, net charge-offs of 1.4% and a return on equity of 20%. enter duty-free.īanco Santander Chile (SAN) is the country's largest and relies heavily on retail and small businesses. A free trade agreement with America took effect in January 2004, and now 90% of Chile's exports to the U.S. ![]() Chile's economy is somewhat dependent on copper and other commodity prices, but it is becoming more diversified and exports account for 25% of GDP. First, Chile: Its market-oriented economy is the star of Latin America, and its hosting of this year's Asia-Pacific Economic Cooperation (APEC) meeting highlighted its flourishing trade and investment flows with Asia and, in particular, with China. It is a soft indirect shot that requires careful preparation and finesse. To use a billiards analogy, proxy investing in banks is like a bank shot, whereby a ball is driven into a cushion before it is pocketed. Assuming solid management and a good balance sheet, this should lead to a jump in profitability and stock price. A pickup in economic growth leads to an increase in loan demand, higher levels of interest income and lower levels of nonperforming loans. Banks sink broad and deep tentacles into a national or regional economy through their loans to companies and individuals. The bank-stock logic goes something like this. ![]()
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