Chinese Banks’ Ratings Downgraded as Local Governments Struggle With Debt

Stocks down 14% from May high, market value evaporates by $77 billion

A Chinese bank employee counts U.S. dollar bills at a bank counter in Nantong in China's eastern Jiangsu Province on Aug. 6, 2019. STR/AFP via Getty Images

Shares in Chinese banks plunged after Goldman Sachs downgraded some ratings due to high local government debt.

According to a July 11 Bloomberg report, shares in China’s banking sector are on the cusp of historically low valuations. Bloomberg Intelligence’s index of Chinese bank stocks is down 14 percent from this year’s high in May, wiping out $77 billion in market value.