Market concerns over Chinese bank’s exposure to regional governments’ debts were overdone – Daiwa
STOCKS VIEWS & ANALYSIS
Market concerns over Chinese bank’s exposure to regional governments’ debts were overdone – Daiwa
STOCKS VIEWS & ANALYSIS

Market concerns over Chinese bank’s exposure to regional governments’ debts were overdone – Daiwa

 

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Some analysis that emphasized the enormous scale of the liabilities of Chinese local governments neglected the differences in the financial position of different provinces, said Daiwa Securities in a note. 

Provinces that are economically more robust possess a greater 

GDP and relatively healthy public finance, and thereby a larger size of outstanding local government debts, but with limited debt pressure, it said. 

Market concerns over Chinese bank’s exposure to regional governments’ debts were overdone and may have exaggerated the actual impacts on banks, it said.

Daiwa maintained a Neutral rating for the Chinese banking sector.