A sharp downturn in the Hong Kong stock market has sent shares of WEIHAI BANK, a city commercial bank deeply rooted in Shandong province, tumbling to HK$1.91, setting a new historical low.

On February 5, 2026, while the broader A-share banking sector experienced a rebound, WEIHAI BANK suffered a rare and severe sell-off. Its stock price plummeted 26.54% in a single day, closing at HK$1.91, marking the lowest level since the bank's initial public offering in 2020.

Surprisingly, this significant decline occurred on a meager trading volume of just 556,000 shares, with a total turnover of only HK$1.14 million. This amount is less than one-thousandth of the capital raised in a state-backed private placement.

The fact that such a thin trading volume could trigger a nearly 30% drop in the share price highlights the challenging position of small and medium-sized Chinese banks listed in Hong Kong.

WEIHAI BANK's stock performance has been consistently weak. The sharp drop on February 5 was not an isolated incident but a continuation of a prolonged downtrend. By February 6, the share price closed at HK$1.93, bringing the bank's total market capitalization down to HK$11.542 billion.

Looking at the long-term trend, the bank's shares have shown weakness since its market debut. WEIHAI BANK listed on the Hong Kong Stock Exchange on October 12, 2020, with an offering price of HK$3.35, but its shares quickly fell below the IPO price.

More concerning is the stock's repeated experience of having zero trading volume for extended periods. In 2022, WEIHAI BANK saw no trading activity for 61 consecutive trading days.

The situation of low trading liquidity has shown no signs of improvement. The total turnover from the beginning of 2024 to date is less than HK$2 million, ranking it last among all banks listed in Hong Kong.

Faced with the continuous decline in its share price, a 3 billion yuan private placement plan launched by WEIHAI BANK in July last year has encountered difficulties. The issuance price for its domestic shares was set at 3.29 yuan per share, with the H-share price equivalent in Hong Kong dollars. This price is almost double the current market price.

Three state-owned institutions—Shandong Hi-Speed Group, Jinlian Group, and Caixin Asset—planned to subscribe up to 2.9865 billion yuan, essentially taking up the entire private placement.

The high-premium private placement by state-owned entities undoubtedly demonstrates a clear intent to support WEIHAI BANK's development, going beyond mere financial investment logic. However, given the severe disparity between the market price and the placement price, these state-backed institutions face the risk of significant paper losses.

From a fundamental perspective, WEIHAI BANK's performance is actually quite solid. In the first half of 2025, the bank achieved operating revenue of 5.07 billion yuan, a year-on-year increase of 11.0%. Its net profit attributable to the parent company was 1.13 billion yuan, up 5.0% compared to the previous year.

The bank's asset scale has also been expanding consistently. Between 2020 and 2024, WEIHAI BANK's total assets grew rapidly from 267.6 billion yuan to 441.5 billion yuan, a cumulative increase of 65%.

The only shortfall is its capital adequacy ratio. By the end of the third quarter of 2025, the bank's core tier 1 capital adequacy ratio had fallen to 8.02%, just a step away from the regulatory minimum requirement of 7.50%.

The challenges faced by WEIHAI BANK are not unique. Small and medium-sized Chinese banks listed in Hong Kong generally suffer from poor liquidity. On March 3, 2023, among more than 30 mainland bank stocks listed in Hong Kong, 10 banks closed unchanged from their previous price, with several experiencing zero trading volume throughout the entire day.

Famous economist Song Qinghui pointed out, "The Hong Kong market inherently has lower liquidity than the A-share market. Coupled with the relatively weak profitability of small and medium-sized banks, their appeal to investors is insufficient."

In December 2024, WEIHAI BANK attempted to revamp its image through measures including a name change and amendments to its corporate charter, altering its full Chinese name from "Weihai City Commercial Bank Co., Ltd." to "Weihai Bank Co., Ltd." However, the impact of these changes appears to have been limited.

In the Hong Kong stock market, small and medium-sized Chinese banks like WEIHAI BANK are gradually becoming marginalized. Data from March 2023 showed that among over 30 mainland bank stocks listed in Hong Kong, 10 closed flat, with several having no trades for the entire day.

In conclusion, for city commercial banks, there is sometimes no real necessity to list in Hong Kong merely for the sake of political achievement.