China’s Biggest Banks See Valuations Drop to 2008 Great Financial Crisis Lows

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China’s big state-owned banks have seen their market capitalisations drop to levels last seen by US lending institutions during the Great Financial Crisis (GFC) of 2008.

China’s big four banks – Agricultural Bank of China (ABC), Bank of China (BOC), China Construction Bank (CCB) and Industrial and Commercial Bank of China (ICBC) – have seen their Hong Kong stock market valuations drop to around 40% of their book value.

These levels mark a 11-year low, and are at roughly the same depths plumbed by US giants JPMorgan Chase and Co and Bank of America during the GFC of 2008.

While the earnings of China’s banks have held steady, investors are concerned about the potential for their bad debts to increase, as regulators drive rapid credit growth to support the Chinese economy during Beijing’s commitment to a zero Covid policy .

Chinese stocks in general have weathered hard times since the 20th National Chinese Communist Party (CCP) Congress that saw Xi Jinping appointed to a third term in office, marking a break from the precedent of a two-term limit set by Jiang Zemin.