Chinese banks shares in Shanghai are
near or below record lows
While Shanghai
hits below 2000, a new post-crisis low, at least there is still some way to go
before hitting the crisis bottom.
Big 4 Chinese
banks, however, are not all that lucky. While the H-shares in Hong Kong are
holding up, their A-shares counterparts are already below or near the crisis
lows. Bank of China, for example, is already well below the 2008 low. ICBC
and China Construction Bank are not yet below the crisis low, but as you can
see, they are pretty close. Meanwhile, Agricultural Bank of China is well below
its IPO price.
The post-crisis
credit expansion has led to worries that sooner or later, Chinese banks will be
facing problems of increasing non-performing loans. Under some severe
scenario, problem loans could more or less wipe out banks’ equity capitals.
Although the problems remain below the surface for now, we all well understand
that the reality is quite a bit worse than what banks are currently reporting,
and from this point onwards, we will only see asset quality of Chinese banks
deteriorate.
So here you have
Chinese banks shares, performing exactly like banks which are expected to face
some troubles.
- Umesh Shanmugam
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