The 10 city commercial banks listed in Hong Kong and the mainland boosted their financial investments by 56 percent to 2.4 trillion yuan ($365 billion) in 2015, according to their annual reports. That’s almost triple the pace of increases at the four biggest state-owned banks. By the end of last year, after a two-year spree, the bulk of Bank of Jinzhou Co.’s assets were classified as financial investments rather than loans. Bank of Jinzhou declined to comment.Leverage and complexity keep increasing over time.
‘Liquidity Problem’
“A small bank may face a liquidity problem if their investments are in default and that will trigger a domino effect,” said Patricia Cheng, a Hong Kong-based analyst at brokerage CLSA Ltd. “Any failure of a financial institution will hurt sentiment and the psychological effects just can’t be quantified.”
Yan Can Short
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FEEDI have purchased October 27 2024 $27 puts on FXI, the ETF based on the
Chinese stock market. I’ve got a stop-loss of 26.26, meaning I’ll exit
should it...
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