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China Banks Are Now Valued Like US Peers at Depths of 2008 Crash

  • Concerns grow that bad debt will pile up at China’s mega banks
  • Investors demand a 26% country risk premium for China banks

Pessimism about China’s banking sector has reached an unprecedented level, even approaching the depths where US lenders traded during the 2008 financial crisis.

The four biggest lenders, including Industrial & Commercial Bank of China Ltd., are priced at near record low valuations of about 0.4 of their book value in Hong Kong after a sector index weakened to an 11-year low. That depressed level roughly matches where investors priced JPMorgan Chase & Co. and Bank of America Corp. among others during the depths of the 2008 crash.