Financial Industry 06 (Jun 16 - Jun 18)

Re: Financial Industry 06 (Jun 16 - Dec 16)

Postby winston » Fri Dec 30, 2016 2:00 pm

The bank rally might just be getting started

by Jeff Cox

Liquidity biggest risk to financials: El-Erian

A sector that has gained 24 percent in barely seven weeks would seem primed for a pullback. But for banks, there looks to be room to run yet.

After trailing the market for much of the nearly eight-year bull run, financials only recently have become outperformers. Their massive runup since the Nov. 8 election has given the group about a 230 percent gain since the financial crisis lows in early 2009.

However, banks remain well-below their precrisis highs. And with an incoming administration expected to roll back some key regulations and interest rates on the rise, the momentum may be just starting to build.

"We believe the group still has room to run as rates move higher, the trading environment improves, modest deregulation decreases company-specific risks, and the U.S. sees better nominal growth aided by a strong U.S. consumer," analysts Brian Kleinhanzl and Michael Brown at Keefe, Bruyette & Woods wrote in a recent research note.

The trade is based on more than momentum or a relief rally.

KBW projects loan growth for universal banks to grow 4.9 percent and 5.1 percent, respectively, over the next two years and sees an improved trading climate that has begun in the fourth quarter and will continue.

More broadly, higher interest rates — KBW expects the Fed to hike five times from now through 2018 — will boost margins and lead to earnings growth of 15.2 percent in 2017 and 14.6 percent in 2018.

Revenues are expected to rise 4.7 percent in both years as well. Earnings for the financial sector are projected to increase 14.4 percent in the fourth quarter of 2016, according to FactSet.

Even with those solid fundamentals, the rally this year has been remarkable.

The KBW Nasdaq Bank Index (^BKX) is up 47 percent since the late-June Brexit vote. The rally intensified since Republican Donald Trump captured the presidential election on Nov. 8.

Leaders have been Citizens Financial Group (CFG) (up. 35.3 percent as of the Tuesday market close), Zions Bancorp (ZION) (34.6 percent) and Bank of America (BAC) (33 percent). Even the laggards have done well. Of the 17 banks in the S&P 500, U.S. Bancorp (USB) has performed the worst post-election with a 15.7 percent gain.

Picking winners is going to be important for investors heading into 2017. Wall Street strategists have muted expectations for market gains, though some have raised their S&P 500 (^GSPC) price targets recently. Overall, though, they expect the index to gain just 4.2 percent, the least optimistic in 11 years, according to Bespoke Investment Group.

David Rosenberg, senior economist and strategist at Gluskin Sheff, is skeptical of the current rally but said Wednesday financials are "the only sector I see that does make some sense."

He said that before the rally financials were "relatively inexpensive and are benefiting from the rise in market rates and widening net interest margins; any move to water down (banking reform) Dodd-Frank is merely icing on the cake."

In its 2017 outlook, Bespoke also pointed out that the sector is still "below its pre-financial crisis high, even after its epic post-election run. We expect the gains to continue at least in the first half of 2017."

KBW offers two words of caution: There are still risks to banks that the landscape ahead may not develop as planned, and that differing valuations raise the need for selectivity.

"We believe valuations are still reasonable at current prices but we argue that investors should be selective in how to position for the future and we are not recommending buying the group blindly," the analysts said.

KBW favors Bank of America, Bank of New York Mellon (BK), Goldman Sachs (GS) and JPMorgan Chase (JPM).

However, the real danger spots for the industry in 2017 probably are outside U.S. borders. Mohamed El-Erian , chief economic advisor at Allianz, said nonbank financials and European banks will present the biggest challenges.

"You shouldn't forget about the banks in Europe and in Italy in particular," El-Erian told CNBC. "That issue is not solved yet, and that's going to be important because this is going to be even more pressure on the euro zone, on the EU, on the" European Central Bank.

Source: Yahoo Finance
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Re: Financial Industry 06 (Jun 16 - Dec 16)

Postby winston » Thu Jan 05, 2017 11:43 am

<Research Report>BofAML: CN Banks Face Increased Risk, Volatility amid Macro Uncertainties

Bank of America Merrill Lynch, in its report, said 2017 could be a challenging year for China's banking sector with more risks and volatility amid macro uncertainties, as market expectations for stability and recovery are high, whereas macro policies are incrementally tightening to contain bubbles.

Credit growth is decelerating and market rates have been rising, leading to rising liquidity risks and credit risks.

Among Chinese banks, the broker prefers CCB (00939.HK) and ICBC (01398.HK) (both with strong capital positions), CM BANK (03968.HK) and ABC (01288.HK) (both with prudent provisioning) and PSBC (01658.HK), which has low exposure to risky sectors.

The broker viewed BANKCOMM (03328.HK) and MINSHENG BANK (01988.HK) as the least favourable ones, as they have higher balance sheet risks.

Source: AAStocks Financial News
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Re: Financial Industry 06 (Jun 16 - Dec 16)

Postby behappyalways » Tue Jan 10, 2017 3:39 pm

chinese-banks-liquidity-squeeze-worse-than-you-think
https://www.bloomberg.com/gadfly/articl ... -you-think
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Re: Financial Industry 06 (Jun 16 - Dec 16)

Postby winston » Wed Jan 18, 2017 1:00 pm

5 Blue-Chip Stocks That Just Got Slammed by Trump

Big financial stocks took a beating Tuesday after Donald Trump sounded off on the strength of the U.S. dollar

By Anthony Mirhaydari

Source: Investor Place

http://investorplace.com/2017/01/5-blue ... H7rcPl96M8
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Re: Financial Industry 06 (Jun 16 - Dec 16)

Postby winston » Thu Feb 02, 2017 3:16 pm

by behappyalways:-

Singapore Banks

Chart of the Day: Banks' asset quality worsens across categories

Source: SBR

http://sbr.com.sg/financial-services/ne ... categories
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Re: Financial Industry 06 (Jun 16 - Dec 17)

Postby winston » Tue Feb 14, 2017 10:08 pm

Singapore's 3 finance firms surge as MAS relaxes funding rules and allows M&As

by ANGELA TAN

Source: Business Times

http://www.businesstimes.com.sg/stocks/ ... allows-mas
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Re: Financial Industry 06 (Jun 16 - Dec 17)

Postby winston » Wed Feb 15, 2017 10:47 am

Hang Seng Hit 4-Month High: Morgan Stanley Bullish On Banks

By Shuli Ren

. “Improving macro coupled with attractive multiples should help China banks do well – we see material upside as this reflation trade catches up.

HK banks will keep doing well helped by higher rates. HK / China banks are now at the highest ever weight in our [financial] portfolio”


Bad debt is becoming less of a problem at Chinese banks, because of the rising producers’ price inflation. Higher factory prices means improving bottom line for Chinese corporations (see chart) and they will have an easier time servicing their debt.

Meanwhile, for Hong Kong banks, rising U.S. interest rates mean that they will have more incentives to lend and they will have higher profit margins.


The stocks are trading at attractive multiples (average of 0.8x book for the 5 largest banks) given the high ROE (~14-15%). These were always cheap but are weighed down by concerns on unrecognised bad loans.

However, the magnitude of discount due to asset quality fears is likely to reduce. The swing in PPI has helped drive up nominal GDP growth and industrial profits.

Funding cost (adjusted for inflation) for the corporate sector has declined sharply. The recent pickup in interest rates should also help NIM progression, at least cyclically.


Source: Barron's Asia

http://blogs.barrons.com/asiastocks/201 ... -on-banks/
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Re: Financial Industry 06 (Jun 16 - Dec 17)

Postby winston » Sat Feb 18, 2017 12:34 pm

Trump could send this industry 151% higher

Source: Daily Crux

http://thecrux.com/trump-could-send-thi ... 51-higher/
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Re: Financial Industry 06 (Jun 16 - Dec 17)

Postby winston » Sat Feb 18, 2017 12:58 pm

Fed president says US banks have “half the equity they need”

By Simon Black

Source: Sovereign Man

http://www.thetradingreport.com/2017/02 ... they-need/
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Re: Financial Industry 06 (Jun 16 - Dec 17)

Postby winston » Mon Feb 20, 2017 1:18 pm

Chinese Banks' Off-Book Wealth Products Exceed $3.8 Trillion

Value of wealth-management product exposure rises 30%: PBOC
PBOC includes off-book WMPs in macro prudential assessment

Source: Bloomberg

https://www.bloomberg.com/news/articles ... yptr=yahoo
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