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China's banking sector has come into the limelight amid the looming risks from the real estate sector, but the DBS Chief Investment Office thinks that the banks will have the support of the authorities. Investors should not be demoralised by the recent developments. The sector is still an attractive component on the Income side of a Barbell portfolio.
The exposure of the banking sector to real estate development has been limited at manageable levels. Furthermore, China banks have demonstrated the ability to maintain stable balance sheet quality despite economic volatility. We expect near-term volatility to persist but the policy implementations are positive for the banking sector in the long term.
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China Bank Equities
At 6-7% yield, China large banks are good long-term dividend yield plays. Consider China Merchants Bank, Ping An Bank, and Postal Savings Bank of China.
China Bank Credit*
DBS Fixed Income Analysts have curated a list of bonds issued by China Banks that have strong credit fundamentals, and will be able to ride through the current contagion within the China property sector.
If you are interested to find out more, please contact your RM.
*For Accredited Investors only
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