Kent McCarthy on Chinese Banks

"“The big banks are junk,” said Kent McCarthy, founder of U.S. hedge fund Jayhawk Capital Management LLC, which specializes in Asian securities. “They're less junky now than they were 10 years ago, but they'll still be junky 10 years from now.”

Mr. McCarthy, a former Goldman Sachs banker in Hong Kong, described the valuations some of these banks enjoy as “ridiculous,” and likened reading the prospectuses for their offerings to a “comedy show.” While he acknowledged public shareholders should accelerate the pace of banking reform, he predicts there will be two or three painful blowups in the sector before it gets its house in order. “It's going to end badly,” he promised. “We're in the ‘nuts' stage — we're not at ‘super-nuts.' This could be one of those things where they shoot up another 20 per cent or 30 per cent first.”"

Timothy Burger
timothyb(at)timothyburger.com