Standard Chartered shares dip on investor’s bad loan worries

Tim Wallace
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STANDARD Chartered’s shares took a tumble yesterday after a fund manager warned the bank’s exposure to China could hit profits if the emerging giant’s economy slows down further.

Speaking at a conference in Las Vegas, Carson Block from Muddy Waters also argued the bank could see rising bad loans.

The warnings come after the bank reported disappointing first quarter profit figures.

Its shares dropped more than three per cent yesterday before recovering late in the day to close down 1.93 per cent.

And credit default swaps – instruments bought to insure against the risk of a company failing to repay its debts – shot up from 0.85 per cent to 1.04 per cent, according to Bloomberg data.

The bank disagrees that China’s economy is in for a hard landing, and says its risk profile has always been made clear to investors.

And data from Markit shows less than one per cent of the bank’s stock is out on loan for shorting.