November 29, 2016 / 10:16 AM / 3 years ago

Franklin Templeton cautious on Chinese banks and real estate

LONDON (Reuters) - Bad loans in China’s banking system and a risk of overleverage and regulation in Chinese real estate are reasons to remain cautious on these segments in 2017, asset manager Franklin Templeton said on Monday.

“We remain cautious of China’s banks as non-performing loan recognition dampens our outlook for the country’s financial firms,” Stephen Dover, chief investment officer at Templeton Emerging Markets Group and Franklin Local Asset Management, and Mark Mobius, executive chairman of Templeton Emerging Markets Group, said in a note.

They added that like banks, China’s real estate sector had staged a “striking turnaround” from a lengthy downturn, but they had remained on the sidelines, in part due to risks of overleverage and regulation.

Reporting by Claire Milhench

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