SHANGHAI, Jan 12, 2026, 04:07 GMT+8 — Premarket
- Bank of China’s A shares on the Shanghai exchange closed at 5.49 yuan, slipping 0.54%.
- December inflation figures from China left room for additional policy easing, though cutting rates risks pressuring bank profit margins.
- All eyes are on this week’s trade figures, with a broader set of data due on Jan. 19.
Bank of China’s Shanghai-listed A shares (601988.SS) open Monday as investors digest new hints Beijing might push stimulus further. The catch for banks remains the same: lower funding costs can boost growth but squeeze profits.
The stock closed Friday at 5.49 yuan, slipping 0.54%, after fluctuating between 5.46 and 5.52 yuan during the session. (Investing)
The broader market climbed, with the Shanghai Composite up 0.92% on Friday. Yet financial shares lagged, Xinhua reported—a trend traders note during policy-driven rallies that typically shift focus to consumer and industrial sectors. (Xinhua News)
Last week, China’s consumer inflation hit a 34-month peak in December, marking a notable shift in the macro backdrop. Yet, the bigger headline was still weak demand alongside persistent factory-gate deflation. The CPI rose 0.8% year-on-year, while the producer price index (PPI), which tracks factory gate prices, dropped 1.9%, according to Reuters. Lynn Song, ING’s chief economist for Greater China, noted, “Despite expectations of a recovery, inflation remains relatively low and should not preclude further monetary easing this year.” (Reuters)
Bank of China and its large state-owned rivals face a timing dilemma. Easing that boosts credit can spur loan growth, yet deeper cuts to benchmark rates often squeeze net interest margins — the gap between earnings on loans and deposit costs.
Concerns about margins persist, fueled by worries over asset quality amid the prolonged property downturn. Large lenders remain a barometer for broader economic confidence, not merely reflections of their own fundamentals.
Competition is fierce. Bank of China sits alongside Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China in the “Big Four” group, which often shifts in unison as policy and growth forecasts change.
The next moves hinge largely on upcoming data. This week’s key focus: China’s trade figures, offering a snapshot of external demand. Investors will be watching closely for signs that the export engine might be losing steam. (S&P Global)
The next major macro catalyst arrives Jan. 19, when the National Bureau of Statistics will publish its latest “national economic performance” report. This release usually includes key indicators like industrial output, retail sales, and fixed-asset investment. (National Bureau of Statistics of China)
But here’s the catch. If policymakers ease too quickly before loan demand picks up, investors might zero in on shrinking spreads—and worry that credit costs could rise down the line, particularly if the property slump persists.
Right now, the key for 601988 is whether bank stocks can keep pace with the broader rally at the open. Traders will also be watching this week’s trade figures and the Jan. 19 activity data closely to gauge if Beijing might adjust its policy stance more aggressively.
