ETF Idea Why China Big Four banks are still attractive despi | FSMOne SG - Research Highlights

ETF Idea

Why China Big Four banks are still attractive despite softening economic growth and tighter margins

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• While China may be facing softening economic growth, it is still one of the fastest-growing economies in the world. Double-digits loan growth in FY2022 will be a key factor that help to support the banks’ net interest income despite pressured net interest margins.

• January 2022 loan growth data marks the end of the contraction of the mid-to-long-term corporate loans that lasted throughout 2H21. 

• The China Big Four banks remain to be very well-capitalised despite the challenges faced. 

• They are also one of the most attractive yield-plays in the market. At current share prices, they are offering investors a dividend yield of 7.8% per annum in the next two years. 

• While there may still be certain levels of volatility within the China banking industry, we continue to favour the China Big Four banks, especially when they are trading at an average PB ratio of just 0.4X. 

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: ChinaAMC Hong Kong Banks ETF (HKEX:3143)