|Bid||6.330 x 0|
|Ask||6.340 x 0|
|Day's Range||6.300 - 6.400|
|52 Week Range||5.550 - 7.210|
|Beta (5Y Monthly)||1.43|
|PE Ratio (TTM)||5.57|
|Forward Dividend & Yield||0.35 (5.40%)|
|Ex-Dividend Date||Jul 02, 2019|
|1y Target Est||9.19|
(Bloomberg) -- Just as it looked like Beijing was starting to get a handle on its regional banking crisis, a much more severe threat is engulfing the world’s largest banking system as a deadly new virus hits the country’s economy.The impact of the spreading coronavirus risks bringing to life the worst-case economic scenarios contained in China’s annual banking stress tests. Last year’s exercise envisaged annual economic growth slowing to as low as 4.15% -- a scenario which showed that the bad loan ratio at the nation’s 30 biggest banks would rise five-fold. Analysts now say that the outbreak could send first-quarter growth to as little as 3.8%.Banks are already suffering record loan defaults as the economy last year expanded at the slowest pace in three decades. The slump tore through the nation’s $41 trillion banking system, forcing the first bank seizure in two decades and bailouts of two other key lenders.“The banking industry is taking a big hit,” said You Chun, a Shanghai-based analyst at National Institution for Finance & Development. “The outbreak has already damaged China’s most vibrant small businesses and if it prolongs, many firms will go under and be unable to repay their loans.”The virus outbreak comes on top of an unresolved trade dispute with the U.S. With many banks under-capitalized, it may put even the nation’s heavyweight lenders, often called on to support growth, at danger from the growing stress.Economic growth is seen plummeting this quarter, even amid heavy cash injections from the central bank. Whether that stagnation will carry through to the rest of the year, depends on how quickly authorities can get a handle on the spreading virus and get its economic engines running again.UBS Group AG estimates growth will slow to 3.8% in the first quarter from a 6% pace at the end of year and to 5.4% for 2020 if the virus is contained within three months. If the virus is more protracted, annual growth could dip below 5%, UBS said. Goldman Sachs Group Inc. also predicts a sharp slowdown in the quarter to 4%, while still predicting full-year growth at 5.5%.Doing its own calculations based on China’s stress tests, debt rating firm S&P Global estimates that the worst-case scenario would cause bad debt to balloon by 5.6 trillion yuan ($800 billion), for a ratio of about 6.3%, adding to the already daunting 2.4 trillion yuan of non-performing loans China’s banks are sitting on.Banks with operations concentrated in Hubei province and its capital city of Wuhan, the epicenter and the region worst hit by the virus, will likely see the greatest increase in problem loans.The region had 4.6 trillion yuan of outstanding loans doled out by 160 local and foreign banks at the end of 2018, with more than half in Wuhan. The five big state banks had 2.6 trillion yuan of exposure in the region, followed by 78 local rural lenders, according to official data.Moreover, policy makers have once again enlisted its largest lenders, including Industrial and Commercial Bank of China Ltd., to serve their civic duty by bailing out millions of struggling small businesses by providing more cheap loans, rolling over debt and waiving fees.Officials on Friday sought to ease concern over the hit to the banking sector. Zhou Liang, vice chairman of the China Banking and Insurance Regulatory Commission, said that a potential increase in bad loans is manageable. Chinese lenders dissolved 3 trillion yuan of bad loans last year alone, he said, adding that bad loan ratio of China’s small businesses was at 3.22%.Highlighting the plight of small bushiness, a recent nationwide survey show about 30% said they expect to see revenue plunge more than 50% this year because of the virus and 85% said they are unable to maintain operations for more than three months with cash currently available.“Social stability is of utmost importance to the authorities in China,” S&P analysts led by Tan Ming said in a recent report. “Therefore, banks have been asked to help carry the burden of this health outbreak.”While most state banks agreed to cut the borrowing costs of virus-stricken firms by 0.5 percentage point, the State Council now requires them to ensure that small businesses are paying no more than 1.6% with government subsidy. Even as cheaper financing may help the broader economy, rates below 5% mean banks are barely making enough money to cover their cost of funding after accounting for default risks, people familiar with the matter have said.A major difference from the 2008 global financial crisis, or the 2003 outbreak of SARS “is the lack of bank capital now to support an aggressive bank-led credit stimulus,” said Grace Wu, head of Greater China Banks at Fitch Ratings in Hong Kong. “Chinese banks do not have the same capacity to replenish capital now given their profitability has trended down in recent years.”And investors are turning more downbeat on the Chinese banks whose shares have underperformed the benchmark in most of the past five years. The “big four” state-owned lenders, which together control more than $14 trillion of assets, currently trade at an average 0.6 times their forecast book value, near a record low.ICBC fell 1.8% in Hong Kong as of 9:50 a.m., extending this year’s decline to 11%, while China Construction Bank Corp., the nation’s second largest, has lost 7.6% so far in 2020.The unexpected epidemic is now their greatest test.“The resilience of China’s banking system may be severely tested,” the S&P analysts said.(Updates with share prices in the third to last paragraph.)\--With assistance from Helen Sun and Zheng Li.To contact Bloomberg News staff for this story: Jun Luo in Shanghai at firstname.lastname@example.org;Lucille Liu in Beijing at email@example.comTo contact the editors responsible for this story: Candice Zachariahs at firstname.lastname@example.org, Jonas BergmanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Beijing’s announcement of several measures to support the anticipated stock-market bloodbath did little to help most sectors.
(Bloomberg Opinion) -- The last place on earth where bankers and traders can make real money is opening up. As part of its trade deal with the U.S., China vowed to grant Western financial institutions more access to its $14 trillion wealth-management industry. A number of foreign-controlled joint ventures with banks are in the works. Days before Christmas, Beijing approved the first one, a tie-up between Amundi Asset Management and a unit of Bank of China Ltd. Shortly afterward, China Construction Bank Corp. agreed to partner with BlackRock Inc. and Temasek Holdings Pte, while Industrial & Commercial Bank of China is flirting with Goldman Sachs Group Inc.Millions of dollars are being thrown at this. JPMorgan Chase & Co. and Nomura Holdings Inc. are buying up extra office space in Shanghai, where staff could be paid more generously than in Hong Kong. Goldman plans to double its headcount in China to 600 over the next five years. But why would foreigners want to crowd into the world’s most competitive market? Simple: Investors in China still have faith in active managers. Last year, it took just 10 hours for a star stock picker to attract more than $10 billion in orders for his firm’s debut mutual fund.Foreign firms might reason that they have deep talent pools, too. Bin Shi, a portfolio manager who has been with UBS Group AG since 2006, can churn out profit better than many of his mainland competitors. His Luxembourg-registered All China Fund returned 50% over the past year. By tapping into local banks’ distribution networks, Western asset managers could benefit from the army of retail investors that might come crowding in.If allowed to compete, Wall Street managers could almost effortlessly bat local competitors away. After all, Beijing wants Chinese wealth managers to emulate the U.S. model. In the West, middle-class savers have built up their nest eggs with mutual funds. They get some sense of their risk-return trade-off by checking (sometimes obsessively) the charts and numbers that showcase the historical ups-and-downs of their fortunes.Not so in China. Two years after the government unveiled sweeping rule changes, many products still carry the false perception of guaranteed future returns. It’s not uncommon for money managers to post these forecasts on their websites weekly. The concept of metrics like net asset value remain completely foreign to a money manager sitting in a Chinese bank branch. In that sense, Western competitors are miles ahead.Then consider the options. If Chinese savers looked at BlackRock’s range of offerings, for example, they’d be blown away. Some funds are designed to help you retire by 2040, while others are more tactical in nature. Blending bonds with stocks in a portfolio is commonplace, and financial metrics such as the Sharpe Ratio or effective duration for fixed income funds are readily available for savers to peruse, if they decide to get a bit technical.In China, investments that can deliver steady, stable gains are rare. Moms-and-pops are stuck with either bank deposits, which are essentially subsidies to the state-owned banks, wealth management products — nowadays pretty boring, thanks to Beijing’s sweeping rule changes to limit risk — or speculative private funds that can cost you dearly.To Beijing’s credit, foreigners have a fairly level playing field in the asset-management business. The new rules, which require banks to spin off their wealth units, are re-drawing the landscape entirely. The first such operation opened for business just six months ago, and there are now about half a dozen. It wasn’t until early December that the government even finalized net capital rules for these operations. So assuming the likes of Goldman and BlackRock can get their licenses quickly, their peers won’t be that far behind. That’s quite a positive step for a country that actively blocks Alphabet Inc.’s Google and Facebook Inc. to allow its domestic players flourish.Of course, we all know the realities of marriage: Whether a partnership yields happiness is anyone's guess. But that shouldn't discourage Western asset managers from trying. There's plenty of money to be made.To contact the author of this story: Shuli Ren at email@example.comTo contact the editor responsible for this story: Rachel Rosenthal at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
BEIJING/SHANGHAI (Reuters) - U.S. asset manager BlackRock Inc, Singapore state investor Temasek Holdings (Pte) Ltd and China Construction Bank Corp (CCB) have agreed to set up a wealth management joint venture in China, said people with direct knowledge of the matter. A memorandum of understanding has been announced internally within BlackRock and CCB, according to the people and an internal notice seen by Reuters. The deal comes as China's government continues to open up its financial industry to foreign firms.
BEIJING/SHANGHAI (Reuters) - U.S. asset manager BlackRock Inc, Singapore state investor Temasek Holdings (Pte) Ltd and China Construction Bank Corp (CCB) have agreed to set up a wealth management joint venture in China, said people with direct knowledge of the matter. A memorandum of understanding has been announced internally within BlackRock and CCB , according to the people and an internal notice seen by Reuters. The deal comes as China's government continues to open up its financial industry to foreign firms.
Is China Construction Bank Corporation (HKG:939) a good dividend stock? How can we tell? Dividend paying companies...
China needs to resolve outstanding financial risks, and must counter risks from "abnormal" market fluctuations that stem from external shocks, said the central bank on Monday, as Beijing prioritises financial stability amid increasing challenges. Financial markets are highly sensitive to global trade situations and rising uncertainties in global liquidity, said the People's Bank of China (PBOC) in its annual financial stability report, adding that it will step up real-time supervision on stock, bond, foreign exchange markets to prevent cross-sector risk contamination. Beijing has stepped up daily supervisions and assessment on potential "black swan" and "grey rhino" events that may occur in the future and has prepared contingency plans, as downward pressure on the economy rises, said the PBOC.
Norwegian Air unveiled higher-than-expected earnings and a deal to offload 27 new Airbus jets, sending its shares sharply higher on hopes that the low-cost carrier can avoid becoming the latest in a series of airline collapses. The carrier on Thursday posted third-quarter net income of 1.67 billion crowns (£141.9 million), raised its 2019 savings goal and outlined plans to cut capacity while increasing operating profit by 4 billion crowns over two years. Under a long-awaited joint venture, Norwegian will sell its A320 NEO planes on order from Airbus to a new leasing company 70% owned by China Construction Bank , generating a much-needed cash profit on each aircraft due in 2020-2023.
The big shareholder groups in China Construction Bank Corporation (HKG:939) have power over the company. Institutions...
BEIJING/SHANGHAI (Reuters) - China's banks face pressure on earnings and asset quality in the coming months as interest rate reforms squeeze margins and a Chinese-U.S. trade war adds to economic uncertainty. Three of the nation's top listed banks this week each reported a profit rise of nearly 5% in the first half of the year, but warned they faced headwind. "The trade war causes uncertainty, and there is downward pressure on the economy," Gu Shu, president of the world's largest commercial lender, Industrial and Commercial Bank of China (ICBC), told a news conference on Thursday.
Looking at China Construction Bank Corporation's (HKG:939) earnings update in March 2019, analyst consensus outlook...
Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of China Construction Bank Corporation and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future.
New bank loans in China likely pulled back in April from strong levels the previous month, but may still outpace the historical trend as the central bank keeps up efforts to support cash-strapped smaller companies, a Reuters poll showed. Chinese banks are expected to have extended 1.2 trillion yuan (135.9 billion pounds) in net new yuan loans in April, falling from 1.69 trillion yuan in March but still ahead of 1.18 trillion yuan in the same month last year, a median estimate in a Reuters survey of 32 economists showed. Bank lending jumped 20 percent in the first quarter to a new record -- and there are some signs the economy is slowly responding -- but there are also concerns that a prolonged, heavy credit burst could fuel a further rise in bad loans as banks loosen lending standards.