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<Research>JPM: Mkt Concern Over MCV Biz Contribution Drags HSBC HOLDINGS, STANCHART Shr Prices
Recommend 13 Positive 11 Negative 26 |
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JP Morgan released a report noting that HSBC HOLDINGS (00005.HK) and STANCHART (02888.HK) slid 3% and 5%, respectively, last Friday (5th), underperforming the HSI by 2 ppts and 4 ppts, respectively, mainly due to concerns over business contributed by Mainland China Visitors (MCVs). Channel checks conducted by the broker indicate that mainland visitors can still open bank and investment accounts in person in the Hong Kong SAR, but the approval process now takes longer than before. When opening investment accounts, customers are also required to sign an "Investor Declaration Form". The broker believes this adds friction to the account opening process and may hinder business growth. Another concern involves outbound direct investment (ODI) by mainland residents. Although detailed regulatory measures have yet to be promulgated, the establishment of a regulatory framework for residents' ODI could have an immense impact on the private banking and wealth management businesses of Hong Kong financial stocks. Before further clarification, this is likely to put pressure on the growth outlook and trading sentiment of HSBC and Standard Chartered. JP Morgan estimates that MCV-related business will contribute only about 2% of HSBC's and Standard Chartered's revenue in 2025. This includes both wealth fees and deposit-spread NII from both existing and new-to-bank MCV clients. This implies a mid-single-digit percentage contribution to EPS. The broker believes that if negative sentiment continues to overreact, it could create buying opportunities. Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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