Goldman targeted by Chinese media for bearish bank view

economictimes.indiatimes.com:

Goldman Sachs Group research after the securities firm's analysts recommended selling shares of local banks, the latest sign of official attempts to counter negative sentiment in markets as the economy slows. The market shouldn't take a bearish view on Chinese banks based on pessimistic assumptions, and negative premises are misinterpretations of the facts, according to a Securities Times report Friday, referring to a Tuesday research note from Goldman. Banks have been actively lowering their exposure to property loan risks, while local governments have stepped up efforts to ease debt risks, the Securities Times said.

A Goldman spokesperson declined to comment on the Securities Times report. The public rebuke is a fresh sign of Beijing's growing unease with eroding investor confidence at a time when an ailing economy is amplifying worries about rising debt pressure and financial stress. It's also a reminder of the complex relationship Wall Street banks have with Chinese authorities as they walk a tightrope juggling business opportunities and bilateral tensions.

Goldman analysts including Shuo Yang highlighted in their note risks to banks' margin from local government debt and more losses within credit portfolios, which could weaken earnings growth, pressure capital accumulation and thus affect dividend payout levels. The Wall Street giant has sell ratings for three Hong Kong-listed Chinese banks, including Industrial and Commercial Bank of China Ltd., Agricultural Bank of China Ltd. and Bank of Communications Co.

It also has neutral ratings on Bank of China Ltd. and China Merchants Bank Co, as well as buying recommendations on Postal Savings Bank of China Co. and China Construction Bank Corp.