China Bank Stocks Lose $194 Billion in Perpetual Value Trap

  • Shares of country’s lenders are down 24% in Hong Kong in 2020
  • Citi predicts profits will continue to slump in second half
Photographer: Qilai Shen/Bloomberg
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Chinese bank stocks: never this cheap, rarely so unloved.

Weakened by the government’s call to sacrifice profitability, stung by ultra-low interest rates and the threat of souring loans, the country’s Hong Kong-listed banks have seen their market value contract by $194 billion in 2020 as of Wednesday. Their share of the MSCI China Index has shrunk to a measly 14%, near the lowest since 2005 and down from a 43% weighting in June 2015.