Traders Betting on China Easing Boost Bearish Options on Banks
- Cost of hedging against drops in CCB, ICBC and BOC has risen
- China Merchants Bank is among the most-shorted lenders in Asia
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Investors are increasingly skeptical about this year’s market-beating rally in Chinese bank stocks on concerns that potential easing measures to further support the nation’s flagging economy will hurt the firms’ profitability.
The cost of hedging against declines on China Construction Bank Corp. shares has jumped, and the number of bearish options outstanding hit a 10-year high relative to bullish contracts, data compiled by Bloomberg show. The trend is similar for Bank of China Ltd. and Industrial and Commercial Bank of China Ltd., whose put-to-call ratio climbed to its highest level in two years following the last expiration.