(Bloomberg) -- Investors couldn't sell Chinese banking giants fast enough this week.
Industrial & Commercial Bank of China Ltd., Agricultural Bank of China Ltd. and Bank of China Ltd. posted their worst weeks since at least June 2016, while China Construction Bank Corp. fell for a fifth consecutive week. The lenders were among the biggest decliners on a gauge of Chinese shares traded in Hong Kong, losing a combined $15 billion in value.
The losses are a turnaround for the Big Four lenders, which rallied along with the Hong Kong market earlier this year as concerns over bad debt gave way to optimism over improving economic growth and corporate profits. While analysts say little has changed for the Chinese banks, they are also especially vulnerable to a correction after going ex-dividend recently.
“Their fundamentals haven't gotten worse; they're still improving,” said Castor Pang, head of research at Core-Pacific Yamaichi HK. “But in the short term, the focus isn't on Chinese banks.”
In contrast, Ping An Insurance Group Co. is among the top performers this week, while PICC Property & Casualty Co. had its best week since November 2016. Funds may have rotated into these shares because insurers will benefit from rising global bond yields, said Peter So, co-head of research at CCB International Securities in Hong Kong. European and U.S. banks also gained this week amid expectations for monetary tightening in both regions.
Click here to read about how bearish bets in Ping An are turning sour
ICBC bore the brunt of the selling, sinking 7.4 percent for the week. The stock has fallen to its lowest level versus the benchmark Hang Seng Index since January 2008, while its Hong Kong shares are now the cheapest in a year compared to its A shares. Agricultural Bank is down 6.2 percent, while Bank of China has lost 5.7 percent.
Investors should see the selloff as a good time to add banks' Hong Kong-listed shares, So said.
“Corporate earnings are improving and the economy is stable,” he said. “At these levels, these shares not expensive, but attractive.”
Exchange filings in April showed that China's big banks mostly lowered their bad-loan ratios and steadied their interest margins in the first quarter, thanks to the country's economic rebound. ICBC reported its biggest profit increase in two years for the period.
Since then, ICBC's asset quality had improved, while its net interest margin had showed signs of widening, Chairman Yi Huiman and President Gu Shu said at the bank's annual shareholder meeting last month.
--With assistance from Darren Boey and Teo Chian Wei
To contact the reporter on this story: Justina Lee in Hong Kong at jlee1489@bloomberg.net.
To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Ryan Lovdahl
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