S&P: China’s Weakened Property Market Could Hit Banks

The slump that hit China’s property market this year could hit the country’s banks according to ratings agency Standard & Poor’s, in the latest warning to the world’s second largest economy.

While the housing market in China has started to see some recovery of late, with data released at the start of the month showing house prices rose at their fastest pace in 18 months, weakness seen earlier in the year could have “negative knock-on effects” for domestic Chinese lenders, S&P warned.

“We continue to monitor the impact of Chinese developments on regional credit quality. We believe that the weakening Chinese property market could have an intermediate negative impact on the Chinese financial institutions sector,” the ratings agency warned in its annual outlook on banks, released late Tuesday.