Asia today - price fixing, Japanese trade data, climate impacts, Big Mac index and is Ping An a buy?

Lots of interesting numbers out in Asia today including the Australian-listed Fortescue in the iron ore space who I wrote up here.

Before we get onto a couple of Hong Kong names, a touch of macroeconomics.  As this report noted
China found 12 Japanese auto-parts makers (including four bearings manufacturers) guilty of price fixing and imposed 1.24 billion yuan's worth (c. US$200 million) in fines.  My observation - akin to the conclusions of this recent Daimler piece - is that the amount per company seems...quite low.  Fear is higher than reality...

Otherwise, despite a rise in exports, Japanese trade data remained poor including higher imports (fuel) and a 25th consecutive deficit.  The yen did push down a little against the US dollar as shown below...good news for my recently doubled short position:

Another story doing the rounds today are the comments from the Asian Development Bank who are observing the potential longer-term climate impact on growth in South Asia.  Really longer-term observations...but 20%+ GDP declines should catch the attention! 

A reason to be avoiding the region?  No.  A reason to be worrying about global climate change impacts?  Yes.  Especially for your pension fund assets. 

Finally I liked this posting in the South China Morning Post on (all in Hong Kong dollar terms) how many Big Macs can be purchased for working for one hour on the local minimum wage...

Interesting to compare the US or Turkey/Poland versus Western Europe or even Mexico versus the US.  

Let's turn to these Hong Kong listed companies now.  I have talked positively about the insurer AIA a number of times before (most recent write-up here) and one of their peers Ping An produced some solid looking numbers today: 

'China’s second-largest insurer, said first-half profit grew 19 percent as premium income climbed and banking revenue increased. Net income rose to 21.4 billion yuan ($3.5 billion), or a diluted 2.55 yuan a share, from 17.9 billion yuan, or 2.26 yuan, a year earlier. A 34 percent profit increase at unit Ping An Bank Co. (000001) and higher premiums earned helped...boost profit'

This latter point is very important.  Ping An's profitability is just over 60% insurance and much of the rest is banking...

...and this is a 'proper' bank in the sense that loans are materially higher than deposits:

So what about bad loans which we are told to worry about in China?  Well usefully they provided this chart:

Now this is interesting because Bank of China numbers are also out and they observe that:

'The bank's non-performing loan ratio increased slightly to 1.02 percent at end-June compared with 0.98 percent at end-March, pushing it above the 1 percent maximum level that the Chinese banking regulator has said is healthy'

Hmm.  It has already been widely observed that Chinese banks appear 'cheap' on a global price-to-book basis.  The trouble is sometimes areas can be cheap for a reason.

I guess what I am trying to say is that insurance and not banking appears to be the way to access Chinese/Asian financial sector opportunities.  On this basis, as per the chart below, AIA remains less volatile and more interesting.

A level for Ping An?  A movement of HK$5 either way from here would increase my interest would be the only conclusion I would have.