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<Research>UBS Projects CN Banks' DPS to Have Downside Risk; CCB, BOC, ABC, CITIC Defensive
Recommend 40 Positive 69 Negative 28 |
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UBS issued a report stating that the MSCI China Banks Index sank 4.6% over the past month, underperforming the MSCI China Index (down 2.6%). Among the H-shares covered by the broker, MINSHENG BANK (01988.HK) fared the best (down 0.7%), while CM BANK (03968.HK) lagged behind (down 10.5%). Southbound Stock Connect accounted for 28.2% of the free float of Chinese banks' H-shares, up 48 bps MoM. Among which ABC (01288.HK) had the largest increase in share price (up 7.2%), while BANKCOMM (03328.HK) had the largest decrease (down 4.4%). In the absence of strong macro stimuli, coupled with a still weak economic outlook and rising geopolitical uncertainties, the broker expected that Chinese banks will trade range bound. On the positive side, the dividend yield of 8% for large Chinese banks' H-shares is relatively attractive. Nevertheless, the potential downward adjustment of mortgage interest rates poses a downside risk to the DPS of Chinese banks. The broker believed that CCB (00939.HK), BANK OF CHINA (03988.HK), ABC and CITIC BANK (00998.HK) are defensive (see a separate table for target prices). AAStocks Financial News |
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