Higher market rates, or the difference between interests received and paid by banks and a key measurement of Chinese lenders’ profitability, have helped stabilize the big lenders’ net interest margins. Three of the big four banks have revealed wider net-interest margins in the third quarter, whereas small banks’ margins narrowed.
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Further supporting the Chinese financial sector, China is expanding faster-than-expected this year, which has helped bolster balance sheets, notably among those heavily-indebted industrial segments, and made them better able to service loans.
ETF investors interested in targeted exposure to the Chinese financial segment can look to something like CHIX. The fund’s top holdings include big Chinese names like Ind & Comm Bank of China 10.6%, AIA Group 9.7%, China Construction Bank 9.4%, Ping An Insurance 6.2% and Bank of China 4.3%, among others.
Broad China country-specific ETFs also include heavy state-owned, financial sector weights. For example, the iShares China Large-Cap ETF (NYSEArca: FXI) has a 53.0% tilt toward financials, including 8.8% China Construction Bank, 7.9% Industrial and Commercial Bank of China and 5.3% Ping An Insurance among its top holdings.
For more information on the Chinese markets, visit our China category.