It is best to suggest that if we wished to find the latest potent of ill-health Chinese banks, we must consider looking at the new king of hybrid bonds.
On average, China’s big banks stock prices went down 12% so far this year, trading at multiyear lows. Adding to their troubles, their contingent convertible bonds which are a core part of banks’ capital are showing a real show selloff. It went up to 0.6 percentage as the yields on Bank of China. It is on-going for already two weeks now even as yields on its more senior bonds have rallied.
However, all of this would not let us conclude that China’s bank giants are on the edge. Investors are still having anxieties with these types of instruments which they have issued in droves the past two years. What could possibly happen more?