Market value of Chinese banks approaches historic low

At today's auction on the Hong Kong Stock Exchange, Chinese banks' share in the MSCI China index fell to 14%, approaching the 2005 low, Report says, citing foreign media.

Recall that in July 2015, the ratio was 43%. The sharp decline is due to the decrease in shares of China's banks. This year alone, the market value has fallen by $ 194 billion.

In 2018, the Chinese government began tightening money market policies to reduce its debt burden, which lessened banks' revenues. In 2020, the banks responded to the administration's call for more loans to revive the economy in the wake of the coronavirus pandemic but suffered losses.

As a result, the largest state-owned banks such as Industrial & Commercial Bank of China (ICBC), Agricultural Bank of China, Bank of China, and China Construction Bank Corp. announced that their profits in the first half of 2020 fell by at least 10% compared to the last year. These banks' shares are about half the book value of their assets or even less than it, which is a historical minimum.

The banks plan to issue $ 29 billion in bonds this month to rectify the situation. Experts from the US bank Citigroup believe that the number of bad loans in Chinese banks may rise from $ 392 billion to $ 556 billion.