Chinese banks' shares underperform for the second consecutive month

Blame it CBRC's new rules for the WMP market.

According to Bernstein Research, for the second consecutive month, the Chinese banks shares underperformed the market after having previously enjoyed 5 consecutive months of appreciation.

Here's more from Bernstein Research:

All of the underperformance occurred on the final day of the month in response to the announcement that the CBRC would be putting into place a set of new controls to increase transparency and to limit risk exposures in the rapidly growing wealth management product (WMP) market.

During the month, only two of the H-share listed Chinese banks (CCB & BOC) outperformed the regional MSCI Asia Pacific ex-Japan (MXAPJ) Index (down -2.3%), though two banks (CMB and ICBC) were inline with the index.

The weighted-average performance for the Chinese banks was -3.3%, underperforming the regional market (as defined by the MSCI APXJ index) by 100bp. In particular, the smaller banks' shares saw the some of the greatest weakness with 5.4% downside for smaller banks, as four of the five worst performing bank stocks in March were smaller banks. Meanwhile, three of the four best performing banks were Big 4 banks.

AgBank was the notable underperformer among the Big 4 banks, as its shares fell 7.0% during the month (driven by its Q4 '12 earnings miss).

Within the bank stocks, the large banks (-2.1%) outperformed the smaller banks (-5.4%) in March, the second consecutive month of outperformance.

The bank that showed the weakest performance in February was China Minsheng Bank as its share price slid 8.4% during the month (after rising 87% since its September 2012 trough).

At the other end of the spectrum, the bank that showed the best performance was CCB, whose shares were down only 0.9% during the month. Over the past 12 months, Minsheng has been the strongest performing Chinese bank by far as its share price appreciated by 52%.