Financial Industry 06 (Jun 16 - Jun 18)

[winston]

Why China’s Large Banks Have Outperformed Lately

By Shuli Ren

Mainland investors accounted for about 11%-25% of daily trading turnover of the Big 4 banks last week.

Source: Barron's Asia

http://blogs.barrons.com/asiastocks/201 ... ed-lately/

[winston]

Stocks: It’s Not Just Brexit That You Need to Worry About This Thursday

By Ben Levisohn

S&P Dow Jones Indices senior index analyst Howard Silverblatt reminds investors that it’s not just Brexit that should have investors on their toes come Thursday.

That’s also the day that the Fed will release the results of its stress test on big banks, including Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM) and Wells Fargo (WFC).

Source: Barron's

http://blogs.barrons.com/stockstowatcht ... yptr=yahoo

[winston]

3 Bank Stocks to Short After the Brexit

European banks are getting slammed, but U.S. financials JPM, BAC and C are looking vulnerable, too

By Anthony Mirhaydari

Source: Investor Place

http://investorplace.com/2016/06/3-bank ... 23vn7h96M8

[winston]

vested in both

<Research Report>Macquarie Expects HSBC HOLDINGS, STANCHART to Miss Profitability Targets

Macquarie, in its report, expected that HSBC HOLDINGS (00005.HK) and STANCHART (02888.HK) will miss the profitability targets, as the profitability targets of both banks are highly dependent on a sharp increase in revenues.

HSBC's profitability target for next year requires 10% yearly revenue growth for 2017 while StanChart's RoE target by 2018 requires revenues to be 20% above annualized 1Q16 levels based on our scenario.

At the same time, costs and loan-loss provisions have to decline.

Macquarie has been doubtful on business strategy and the restructuring plans for both banks, thus the broker remained cautious to both banks.

The broker would turn more positive on both banks when they start to exit underperforming markets and businesses which would turn them into credible turnaround stories. This looks unlikely for this year, possible for next year and likely for 2018.

For HSBC, the broker rated Neutral with the target price of HK$51 as the broker expected a miss from profitability targets, and may not be able to maintain the dividend stability.

For StanChart, the broker rated Underperform with the target price of HK$45, as its asset quality risks continue to look significant, risk buffers are low relative to peers and the restructuring plan does not fully address the structural profitability issues.

Source: AAStocks Financial News

[winston]

vested in both

<Research Report>JPM: HSBC HOLDINGS Downside Risks Higher Than STANCHART

JP Morgan, in its report, said HSBC HOLDINGS (00005.HK) (HSBC) and STANCHART (02888.HK) (STAN) corrected 6.6% and 9.5%, respectively, in the HK market on Friday after Brexit.

It believed macro growth deterioration in the UK and potentially EU areas, leading to a tougher operating environment for banks. This includes slower loan growth, rising credit costs and NIM contraction.

The broker noted that 26% and 10% of HSBC's revenue in 2015 was contributed by its UK and Europe business, respectively, significantly higher than 4% and 2% for STAN.

Brexit poses larges impacts on HSBC's earnings as capital preservation may take a higher priority in an environment of mounting uncertainty and volatility in financial markets.

On STAN, the impacts of Brexit are likely to be contained. Once the initial panic-selling sentiment stabilizes, a steep price correction of STAN could be a buying opportunity.

JP Morgan also said Brexit will heighten financing cost and affect UK economy and housing market. Coupled with uncertainty in policy of licencing of banks and insurers and possibility of another Scottish referendum, markets become more unstable.

Source: AAStocks Financial News

[winston]

<Research Report>Deutsche: Too Early to Quantify Impacts of Brexit; Cautious about Asian Banks

Deutsche Bank, in its report, considered that it is still too early to quantify the potential impact of the UK's vote to leave the EU. Much will depend on the terms of the exit.

The 2 UK listed banks HSBC HOLDINGS (00005.HK) and STANCHART (02888.HK) are most directly impacted by Brexit. The broker estimated UK/Europe contribute roughly 30% of HSBC's assets and 10% of Standard Chartered's.

Though there is an immediate FX translation impact of a weaker GBP, a bigger concerns is from the potential revenue drag into 2017 and beyond. Deutsche Bank rated HSBC HOLDINGS at Hold and STANCHART at Sell.

The broker remained cautious on Asian banks as it is late in the credit cycle with debt levels growing at an unsustainable pace in most Asian markets.

The drag on trade and economic growth and the destabilising impact on the broader Euro block are placing downward pressures on global yield curves, and on Asian bank RoA/RoEs.

Source: AAStocks Financial News

[winston]

Why Jefferies Downgraded Nomura And Daiwa

By Shuli Ren

Japan’s two major brokerages Nomura Holdings (8604.Japan) and Daiwa Securities (8601.Japan) are sliding for the third consecutive day after Britain voted to leave the European Union, down 3.9% and 6.3% respectively.

Investors are worried that Brexit would force Nomura and Daiwa to move their London operations to continental Europe, thereby incurring a lot of relocation costs.

Nomura has more than 2,500 employees in London, while Daiwa has about 400 employees. Both brokerages expanded into London in the past to help large Japanese companies raise funding in Europe.

Over the weekend, Jefferies downgraded Nomura and Daiwa by one notch to Sell and Hold respectively. Analyst Makarim Salman sees both houses to have fewer debt and equity raising deals, exacerbated by Brexit, and the two brokers do not have much room to cut costs further.

But Jefferies’ downgrade was more than just because of Brexit. In the case of Nomura, it is an expensive stock. Specifically, Jefferies estimates Nomura can clock in only 4.9% return on equity this fiscal year, but it traded (as of Friday) at 10.4 times forward earnings. That is expensive considering JP Morgan (JPM) traded at 10.9 times with higher 6.3% return on equity. Goldman Sachs (GS) has 7.9% return on equity and traded at only 10.1 times earnings (as of Friday).

Jefferies has a Hold rating on Daiwa because its valuation is fair next to Goldman’s. It trades at 10.4 times forward earnings on 7.2% return on equity.

Jefferies now has 310 yen price target for Nomura, implying 0.4 times book, and 600 yen price target for Daiwa, implying 0.78 times book.

Source: Barron's Asia

http://blogs.barrons.com/asiastocks/201 ... and-daiwa/

[winston]

vested in both

<Research Report>JP Morgan Trims HSBC HOLDINGS, STANCHART Target to $46 & $78

JP Morgan, in its report, said that with the Britain vote to leave the European Union, it is expected that the macro growth may deteriorate in the Britain and EU areas, which may bring uncertainty for HSBC HOLDINGS (00005.HK)'s future dividend payout ratios.

This is because capital preservation may take a higher priority amid high market volatility.

Hence, the research house trimmed 2017/18 dividend of HSBC HOLDINGS to US$0.34 and trimmed the adjusted EPS in 2016/17/18 to 2%, 8% and 8% respectively to factor in slower loan growth, NIM contraction and other factors.

The target price was revised down to $48 from $46 and the rating was maintained at Neutral.

JP Morgan said that it prefers STANCHART (02888.HK) over HSBC HOLDINGS since the business exposure of STANCHART in the Britain is relatively lower, with approximately 94% of revenue from Europe and other regions than the Britain last year.

The steep price correction of STANCHART could be a great buying opportunity. The target price was lowered to $78 from $80 and the rating was maintained at Overweight.

Source: AAStocks Financial News

[winston]

by behappyalways:-

Italy eyes €40bn bank rescue as first Brexit domino falls

Source: Telegraph

http://www.telegraph.co.uk/business/201 ... ino-falls/

[winston]

Singapore's UOB suspends London property loans after Brexit

* UOB among first to turn cautious on UK property loans

* Other banks still lending, but asking clients to be cautious

* Moody's revises outlook for Singapore banks to negative

By Saeed Azhar

Source: Reuters

http://www.reuters.com/article/britain- ... SL4N19M152