Financial Industry 06 (Jun 16 - Jun 18)

[winston]

Trump weighs breaking up Wall Street banks; raising US gas tax

Source: Daily Crux

http://thecrux.com/trump-weighs-breakin ... s-gas-tax/

[winston]

Canada's banking system maybe crashing before our eyes

Source: Daily Crux

http://thecrux.com/canadas-banking-syst ... -our-eyes/

[winston]

JPMorgan Tells Banks to Partner Up as U.S. Deposit Drain Looms

by Matthew Monks

Crunch may be felt this December as Fed’s policy reverses
Midsize-bank deals already underway in quest for deposits

JPMorgan Chase & Co. has some advice for regional banks: A deposit drain is coming, so merge while you can.

Investors took money they got selling mortgage-backed bonds and Treasury securities to the Fed and parked it in U.S. retail and commercial bank accounts.

This created some $2.5 trillion in excess bank deposits, according to JPMorgan. It estimates that 60 percent, or $1.5 trillion, of that money will trickle out of banks in the next four to five years if the Fed follows through with recent guidance and begins reversing quantitative easing in December.

Source: Bloomberg

https://www.bloomberg.com/news/articles ... gn=markets

[winston]

Many financial institutions should go bust, China central bank researcher says

Xu Zhong, chief analyst at People’s Bank of China, says lenders are being kept wrongly afloat because certain authorities ‘don’t want to open the jar’

“Not a single Chinese financial institution has gone bankrupt ... are China’s financial institutions really so good that not even a single one has gone bust?” Xu asked in a speech at Peking University.

“The real problem is that some authorities and local governments don’t want to open the jar.”

Regional banks often serve as tools for the local government to keep local state firms afloat and a source of financing for infrastructure projects, making it nearly impossible for regional banks to go under

China had 4,261 banks at the end of 2015, according to the latest data from the banking regulator. But among them, only big five state lenders, namely the Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China and Bank of Communications, as well as 12 commercial joint-stock banks are regarded as systemically important institutions.

Source: SCMP

http://www.scmp.com/news/china/economy/ ... ntral-bank

[winston]

China’s banking sector is facing new headwinds as asset growth cools

For the past few years, Chinese banks boosted their assets at a rapid clip, mainly by disguising loans as investments.

They structured lending as investments instead of loans, so they could set aside little or no capital for potential losses, freeing up bank capital.

Many local government financing vehicles’ projects span 10 years and have to rely on debt “rollovers” to keep afloat.

Source: SCMP

http://www.scmp.com/business/companies/ ... owth-cools

[winston]

Why Chinese Bank Stocks are Still Attractive

By Isabella Zhong

Hou of Bernstein argues BOC, CCB and ICBC still appear to be undervalued despite their recent gains.

With stabilizing NIM and NPL formation, we still think this level of valuation discounts the fundamentals of CCB, BOC and ICBC and any correction in the near term would represent good buying opportunities into these stocks.

Rising Chinese treasury yields could be a boon for the sector.

Overall we still favor quality names such as CCB, ICBC and BOC.

Among the three banks, we see CCB has the best fundamentals and profitability and is our top pick for the sector.

On the other hand, BOC has lagged in valuation recovery and may provide some catch up opportunities for investors.

Source: Barron's Asia

http://www.barrons.com/articles/why-chi ... 1496628272

[winston]

Report warns contagion risk grows among Chinese banks as capital levels weaken

Everbright says interrelated assets within the banking system are growing, and that 2.3 trillion yuan of additional funding is needed to cement capital bases

It names particularly national banks such as Industrial Bank, China Minsheng Bank, SPDB, Citic Bank, and city commercial banks such as Shanghai Bank, Nanjing Bank, Hangzhou Bank, Ningbo Bank and Beijing Bank.

Source: SCMP

http://www.scmp.com/business/banking-fi ... nese-banks

[winston]

Chinese Banking Giants Lose $16 Billion in a Week on Share Rout

Source: Yahoo Finance

https://finance.yahoo.com/news/chinese- ... 03759.html

[winston]

The rally in big banks is just getting started…

by Justin Brill

JPMorgan Chase (JPM), Citigroup (C), and Bank of America (BAC) led U.S. firms in unveiling plans to boost dividends and stock buybacks more than analysts had projected, after every lender passed annual stress tests for the first time since the Fed began the reviews in the wake of the 2008 financial crisis.

Source: Stansberry Digest

http://thecrux.com/the-rally-in-financi ... g-started/

[winston]

China: <Research Report>M Stanley: Lifts CN Banks' Target Prices on Widened NIM

Morgan Stanley, in its report, has adjusted 2017 earnings forecasts for Chinese banks, and adjusted H-share and A-share target prices up by 5% and % on average, largely due to revised NIM assumptions.

The broker believed a multi-year NIM expansion cycle for banks with strong funding franchises.

Increases in asset yield will likely continue, with still rational deposit competition supporting NIM for quality banks, while those banks that rely heavily on wholesale funding will benefit notably less.

The broker expected PSBC (01658.HK), ABC (01288.HK), CM BANK (03968.HK) and ICBC (01398.HK) will be the best positioned Chinese banks to benefit from NIM expansion.

Morgan Stanley said banks with strong funding franchises are the big four banks (ICBC, CCB (00939.HK), ABC and BANK OF CHINA (03988.HK)), and PSBC, CM BANK and CQRC BANK (03618.HK).

The broker's top picks are now CCB, ICBC, BANK OF CHINA and CQRC BANK, given modestly more attractive valuations.

Source: AAStocks Financial News