Strength in big-name Chinese banks is helping TAO as well. The Global X China Financials ETF (NYSEArca: CHIX) has surged 23% this year despite dividend cuts and executive departures from some of China’s largest state-run banks. PBOC rates cuts are also helping CHIX. [China Bank ETF Surges]
The largest state-backed banks could benefit from the grater flexibility to set rates. These banks won’t have to compete for deposits since the average saver will feel these banks are safer as a government-controlled entity.
Banks could eventually extend more loans to private borrowers where they can demand higher rates. However, the large spreads between private and state-owned borrowers have persisted, suggesting banks will be slow to ditch the reliability of state-backed companies.
Guggenheim China Real Estate ETF