China managers dump banks as credit crunch fears punish investors

Funds with heavy exposure to financials are at the bottom of the IMA China sector over six months, as China's banking reforms caused a savage sell-off in financial stocks.

A number of funds including offerings from Allianz, HSBC, Legg Mason, and MFS all have close to 40% in financials in their China funds, while the sector’s best-performing funds have avoided the asset class. Banking stocks have sold off as fears of a Chinese credit crunch gripped investors. Commentators have started to draw parallels between the liquidity problems in China and those in the US, before the collapse of Lehman Brothers, which triggered the financial crisis. The seven-day SHIBOR rate – the rate at which domestic banks lend to each other and a key indicator of liquidity – hi...