China banks downgrade 'due to pessimistic assumptions'
Goldman Sachs' downgrade of some major Chinese lenders to "Sell" ratings is based on "pessimistic assumptions," China's Securities Times said in an editorial on Friday, as worries over the banking sector deepen amid a rocky economy. "It is not advisable to be bearish on the fundamentals of Chinese banks based on pessimistic assumptions, and to a large extent there is a misinterpretation," the newspaper said. Goldman said in a report on Wednesday that it had downgraded Agricultural Bank of China (AgBank) from "Neutral" to "Sell", while cutting Industrial and Commercial Bank of China (ICBC) and Industrial Bank from "Buy" to "Sell". Chinese bank shares listed in Hong Kong tumbled after the report was released. Investors are concerned about Chinese banks' exposure to local government debt, earnings risks stemming from such debt, and diverging fortunes among individual banks, Goldman said in the report. Chinese policymakers are stepping up efforts to boost infrastructure investment and are tackling hidden local government debts, the Securities Times said. (Reuters)