In a full report presented below, Credit Suisse’s Sanjay Jain, the China strategist, has revised his base case Non Performing Loan ratio forecast from 4.5%-5.0% to 8.0%-12.0%: a unprecedented doubling in cumulative losses. Why unprecedented? Because as he explains, this could “work out to 65–100% of banks’ equity.” Crickets? Yes, Credit Suisse just singlehandedly said the equity value of the entire Chinese banking system is between 66% and 100% overvalued. The four horsemen of the Chinese apocalypse are i) a surge in underground lending, ii) a property downturn, iii) bad bank debt and iv) and “hot money” outflows.
Full report below.