China bank stocks face crisis of confidence over bad debt risk

Investors see uncertainty over extent of lenders' nonperforming loans

20231113N Yuan bank notes REUTERS

A machine counts yuan banknotes at a commercial bank in Beijing. © Reuters

NORIYUKI DOI, Nikkei staff writer

SHANGHAI -- Shares in Chinese banks are languishing at near-record-low valuations as investors cast a wary eye on lenders' exposure to the troubled real estate sector.

The banking sector accounts for roughly 10% of the value of China's stock market. Its slump also reflects the risk of an economic downturn in China.

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