China's bargain banks miss rally as debt spooks investors

Hong Kong

NOT even the cheapest shares in 13 years can lure investors to China's banks. On a price versus book value basis, Chinese financial firms are trading at the biggest discount since 2004 to both the MSCI China Index and their Asian peers. The stocks have underperformed all but two other industry groups this year, dropping to an almost nine-week low on Wednesday.

While that has spurred bullish calls from strategists and analysts alike, investors are not biting. Banks are being left on the shelf, even as a surge in Chinese equities triggers a round of bargain hunting, with stocks linked to old drivers of growth in Asia's largest economy enjoying gains.