Chinese financials have been some of the best performing and most attractive stocks at the beginning of 2018, and we have noticed. Asia Unhedged has been a broken record on the subject since January, noting the belated recognition among investors that China’s banks are trading too cheaply. As David Goldman wrote last month, the forward-looking price-earnings ratio for major Chinese banks is about half that of their American counterparts, despite significantly reduced risk.
There are now fewer reasons for Chinese lenders to be so cheap, and the financial news outlets are finally starting to report what we have been saying for months.
The Financial Times writes this week on a plethora of developments that support the shift in sentiment: