Big Chinese lenders see stocks drop on fears of capital requirement tightening
SHARES of major Chinese lenders China Construction Bank (CCB) and Agricultural Bank of China (AgBank) fell to multi-month lows yesterday, hit by potentially souring loans, an economic slowdown and tighter capital requirements.
CCB printed a nine-month low of HK$6.43 (£0.50) in early trading, down 2.7 per cent. AgBank was down 3.8 per cent to a four-month low of HK$3.84, versus the benchmark Hang Seng Index’s 0.4 per cent rise.
“The risk of a hard landing for the Chinese economy is increasing,” said Alexander Lee, a Hong Kong-based analyst at DBS Vickers. “The Japanese earthquake, a slow US economy, the Eurozone problems and a slowing Chinese economy are all building up.”
CCB is China’s largest mortgage lender at a time when the government is taking increasingly heavy-handed measures to cool real estate prices, prompting Standard & Poor’s to lower its outlook on the country’s property sector to negative.
AgBank is the biggest lender to rural causes and has the highest non-performing loan ratio and lowest capital adequacy ratio among the big four lenders, raising worries that it may need fresh capital if the government tightens capital requirements.
Further weighing on the two stocks is the impending expiry of their cornerstone investors’ lock-up period