Agricultural Bank Tops A-Share Market as Valuation Climbs Past Peers
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The rally pushed Agricultural Bank’s combined A-share and H-share market capitalization to 2.59 trillion yuan
Agricultural Bank of China Ltd. has surged to a record valuation, as shares of the state-owned lender climbed to their highest level ever, buoyed by strong performance, a unique rural strategy, and a broader flight to safety amid market turbulence.
On Friday, the bank’s Shanghai-listed shares hit an intraday peak of 7.69 yuan ($0.93) before ending the session at 7.62 yuan, up 1.7% on the day. That marks a 49.1% gain so far this year, leading the banking sector and outperforming a sagging broader market, which saw major indexes fall by more than 2%.
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- Agricultural Bank of China hit a record valuation, with shares rising 49.1% year-to-date and market capitalization reaching 2.59 trillion yuan.
- The bank’s outperformance is attributed to strong fundamentals, a rural-centric strategy, and investor demand for safe assets amid market volatility.
- Its price-to-book ratio returned to one, and analysts expect continued growth, driven by county-level finance focus and stable dividend yields above 3%.
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Who’s Who
- Agricultural Bank of China Ltd.
- Agricultural Bank of China Ltd. reached a record valuation, with its Shanghai-listed shares hitting 7.69 yuan. This 49.1% gain this year is attributed to strong performance, a unique rural strategy, and investors seeking low-risk assets. The bank leads China's A-share market by capitalization and leads state-owned banks in first-half operating revenue and net profit, driven by its focus on county-level economies.
- Industrial and Commercial Bank of China Ltd.
- Industrial and Commercial Bank of China Ltd. is mentioned as having been surpassed in market capitalization by Agricultural Bank of China Ltd. on October 15. By the close of Friday, Agricultural Bank had extended its lead over Industrial and Commercial Bank of China Ltd. to 800 billion yuan in combined A-share and H-share market capitalization.
- Tianfeng Securities Co. Ltd.
- Tianfeng Securities Co. Ltd. is mentioned as the employer of Liu Jie, a chief banking analyst. Liu Jie authored a report highlighting Agricultural Bank of China's strong loan growth potential due to untapped rural demand and its ability to reduce funding costs through individual demand deposits.
- Huatai Securities Co. Ltd.
- A report by Huatai Securities Co. Ltd. highlighted a "convergence effect" where consistent stock performance attracts long-term investment, further driving up prices. This was noted in the context of investors shifting towards perceived safe havens due to softening economic data and fading momentum.
- China Merchants Securities Co. Ltd.
- Wang Xianshuang, the chief banking analyst at China Merchants Securities Co. Ltd., believes that Agricultural Bank of China's valuation could rise further above its price-to-book ratio of one. He attributes this to continued investment in a low-interest-rate environment and the bank's strong performance in county-level finance. Wang also predicts that more Chinese banks will see their valuations rise to or above book value, potentially outperforming the broader market.
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