Asian banks and the coming credit crunch

The smoke signals from the world's central bank define my macro angst. Take India, the jewel in my short-sale crown. I find it amazing how many investors are still bullish on Indian shares and bank credit even though the Reserve Bank of India has now sworn to clean the manner in which banks classify, fudge and hide non-performing loans. In effect, this means Dr Raghuram Rajan will force bank chief executives to boost provisioning rates on "restructured loans" with peekaboo accounting. This means Indian banking faces a regulatory/earnings shock of (forgive the tired awful cliché!) Himalayan dimensions. At the very least, this means curtain Indian bank shares will be a license to make money on the short side as earnings growth expectations are crushed on Dalal Street.
The Indian economy will face a bad debt tsunami that could be near $200 billion and hit bank credit growth. I cannot see how India's go go public and private banks, with their corporate ties to near bankrupt oligarchs and a consumer credit bubble time bomb, could well lose 20-30 per cent in market cap and see their credit ratings downgraded at least two notches in 2016? Who? I will not name specific banks for obvious reason but the cognoscenti in Indian finance know exactly what I am talking about.
I had grown nervous on Japan at 20,000 Nikkei and ¥123. However, I am not comfortable even at 19,000 Nikkei and ¥121 since Bank of Japan Governor Kuroda will do squat on more easing until the sakura cherry blossom garlands the sacred slopes of Mount Fuji, where the spirits of the divine wind (kamikaze?) float amid the mist, the fog and the teardrops of the Sun Goddess. The next big Bank of Japan move could happen in April when the yen could well be trading at ¥115 to the US dollar. This means there is a bloodbath in the near future for leveraged investors in Japanese equities. Note that the Japanese yen had its strongest bid in the foreign exchange market since August. Yen hedged Japan was a licence to print money since 2012 because I could "divine", as the French put it, the twists and turns of monetary policy and its impact on Maranouchi and yen debasement, the only arrow of Abenomics that seemed to work. That was why I went gaga for investors to buy Japan Inc on Nikkei 8,000 and buy dollar/yen at 78 the day a close friend from Penn steeped in the history, culture, economics and banking system of the Eight Celestial Islands briefed me on the impact of Shinzo Abe's landslide win on the Empire of the Rising Sun. This means Topix plunges to 1,400 by April and Japanese megabanks are leprosy to own.
The 40 per cent plunge in the Turkish lira and Malaysian ringgit bas taught Gulf bankers, investors and sovereign wealth funds a hard lesson against investing in economies with poor governance, leveraged banking systems, corrupt political elites and hyper-volatile hot money capital flows. I had recommended investors short Turkish banks in autumn 2014, a 50 per cent profit in 2015 for a UAE dirham investor. So what is the next big short idea in Asian finance? When crude oil falls 45 per cent in eight months, my instincts tell me it is not just the Saudi/Russian/US shale engineered glut but a deflation shockwave that will gut the world's bank and corporate credit markets. So I look at Indonesia; Jakarta has rejoined even though it is a net oil importer, which means Jokowi will never dare order an oil production cut.
Now higher US rates are the kiss of death for the Indonesian rupiah borrowing costs in US dollar will at least triple in 2016, a financial Black Death for leveraged corporates from Bombay to Jakarta, Istanbul to Kuala Lumpur, already devastated by mediocre global growth and a shrinkage in world trade. So 14 times earnings means 2015 is the year of living dangerously in the Jakarta.
I began to visit Bangkok on business after the September 2006 military coup that toppled the populist Thai Rak Thai leader Thaksin Shinwatra. 2006-15 has been Thailand's tragic lost decade and Siam is still under military junta rule under General Prayuth. I cannot see how General Prayuth can boost economic reform or return Thailand to civilian rule even as the revered 86-year-old King Bhumibol is ill.
The macro omens (export, consumer debt, growth) are awful. The Fed/China shocks will hit Asia's Detroit hard. I am very bearish on Thai banks and the baht, which can depreciate to 38.