Economics
China's Risk Crackdown Is Giving Giant Bank Stocks a Boost
- Some Chinese banks are starting to trade above book value
- Lower credit risks and higher rates have bolstered the sector
This article is for subscribers only.
China’s top banks -- the biggest in the world -- have typically traded below the value of their assets on concern over rising bad debt and falling profitability. That’s starting to change, and quickly.
A recent surge in the Hong Kong-traded shares of China’s Big Four state banks lifted their average price-to-book value ratio to 1 as of Monday. That’s the highest since an equity boom ended in 2015. China Construction Bank Corp. and Industrial & Commercial Bank of China Ltd. are now back above the value of their net assets.