Chinese bank stocks in Hong Kong experienced gains on Friday following reports that regulators are considering easing shareholder restrictions. The potential change aims to broaden options for lenders seeking to raise capital. The National Financial Regulatory Administration may allow some bank shareholders to become major investors – defined as owning stakes of 5% or more – in up to two additional banks, on top of the current limit of two. A change in the rule could prompt banks to issue more shares either privately or in the open market.
Shares in major banks responded positively to the news. Industrial and Commercial Bank of China (ICBC) rose 1.2% in afternoon trade, while China Construction Bank (CCB) and Postal Savings Bank of China (PSBC) both increased by more than 1%. The broader Hang Seng Mainland Banks Index added 0.6%. Analysts from Citi noted that the potential rule change would have “a positive impact on China banks,” potentially accelerating loan growth and driving management incentives.
JPMorgan also released a report stating that easing restrictions “could broaden the investor base for China banks, and would thus be positive for the sector in general.” Ping An Insurance (Group) Co of China, which has banks in its portfolio, saw its stock rise 0.6% in Hong Kong. Ping An is a diversified financial services group providing insurance, banking, and investment services. Its Co-CEO Michael Guo said the insurer would support further enhancements to investment returns in the financial industry under supportive regulatory policies.
The conglomerate stepped up investment in banks last year. Relaxing shareholder rules would potentially allow Ping An Group to hold more than 5% in addition to its share in its subsidiary, Ping An Bank, according to JPMorgan. Potential beneficiaries could include Ping An portfolio lenders such as ICBC, CCB, PSBC and China Merchants Bank, all of which are scheduled to report earnings later on Friday.
