by Zhang Shidong at scmp.com
A newspaper owned by the Chinese Communist Party has pushed back against a report by Goldman Sachs that prompted a sell-off of some of the nation’s major state-backed banks.
“Pessimism” towards China’s banking industry should not be encouraged and is largely a “misinterpretation”, according to a front-page editorial published on Friday by the Securities Times, a newspaper run by the state-owned People’s Daily.
Chinese lenders have cut their exposure to the embattled property market this year, and the risk arising from local-government financing vehicles is manageable, with the government increasing its spending on infrastructure to bolster growth, the article said.
The commentary is a rebuttal to a research report issued on Tuesday by Goldman, in which the US investment bank cut its ratings on Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China and Industrial Bank to “sell”, predicting their risk exposure to local government debts will erode earnings and dividend payouts.
The bearish call contributed to a sell-off that plunged the Hang Seng Index towards a bear market and sent the yuan to its weakest level against the US dollar in eight months.read more