Citizens walk past a billboard advertising the Shanghai-Hong Kong Stock Connect, in south China's Hong Kong.(Xinhua/Lui Siu Wai)
BEIJING, Oct. 12 (Xinhua) -- Northbound investors, referring to overseas investors buying stocks on China's A-share market under the Stock Connect programs, added their holdings of bank stocks in the first three quarters of this year, reported Securities Daily on Wednesday.
The newspaper quoted data from Choice, a financial data platform, saying that northbound investors raised their A-share holdings of 31 banks, accounting for 74 percent of the number of all the banks listed on A-share market, from January to September.
By the end of the third quarter, their A-share holdings of six banks surged by more than 100 percent compared with comparable data on December 31, 2021, with holdings of A-shares of Xiamen Bank (601187.SH) up as high as 1516 percent.
Northbound investors' A-share holdings of 25 banks and 13 banks rose by over 10 percent and 50-plus percent respectively in the first nine months of this year.
Despite the 8.94 percent decline in the first three quarters, banking stocks on A-share market presented relatively strong resilience amid the overall market fluctuations.
The report attributed northbound investors' holdings increase in bank A-shares to the generally encouraging performance of A-share market-listed banks in the first half year.
By net profits, 40 of the 42 listed banks posted positive year-on-year growths in the first six months and 31 of them saw their non-performing loan (NPL) ratio down from the end of 2021.
Recently, research reports issued by securities brokers mostly expected multiple positive signals to pillar up performance of bank A-shares in the fourth quarter.
Thanks to the marginal boosts from real estate industry, an upward valuation correction for bank A-shares which have suffered excessive declines may be spurred, especially in light of the highly expectable robust lending growth in infrastructure and other sectors in the fourth quarter.
Moreover, China's A-share market-listed banks may face lessening pressures in maintaining their net interest rate margin (NIM) this quarter.
Due to multiple constraints, China's policy rates are likely to maintain unchanged in the fourth quarter, but the downward adjustments of listed deposit rates of many banks since mid September may effectively optimize their core borrowing costs, according to a research report with Everbright Securities.
As regards asset quality, the newspaper said listed banks' asset quality may bottom out in the fourth quarter, also likely to help strengthen performance of the bank A-shares.
By the end of August, NPL balances of China's banking institutions stood at 3.8 trillion yuan, with the NPL ratio at 1.80 percent, down 0.10 percentage point year on year, and provision coverage ratio at 200.5 percent, said the report quoting an official with China Banking and Insurance Regulatory Commission.
Alongside the gradual recovery of China's economy, the fundamental for long-term development of banks is still solid. Listed banks, the relatively quality part of banking sector, boast relatively low valuation and high margin of safety, Dong Ximiao, chief researcher with Merchants Union Consumer Finance Co., Ltd. said. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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