Financial Industry 07 (Jul 18 - Dec 24)

[winston]

3 Stocks Primed for Gains Should Trump Win Re-Election

"Bank stocks performed significantly better under Republican administrations [...]

This analysis would seem to suggest that bank stock investors would fare better with a Trump reelection than a Biden win".

Source: TipRanks

https://finance.yahoo.com/news/3-stocks ... 58395.html

[winston]

China: 1.55m Chinese open stock trading accounts In June

A total of 1.55 million investors opened accounts to trade stocks on Shanghai and Shenzhen bourses in June, up 46.72 percent year on year, industry data showed, state media reports.

Individual investors stood at 1.547 million last month, accounting for the majority of investors, while new institutional investors reached 2,100.

The number was up by 27.58 percent from May. This year, June was the month with the third highest number of accounts opened, second only to 1.89 million in March and 1.64 million in April.

Based on data of the past five years, the peak period of opening accounts lies in March.

By the end of June, about 1.68 million investors opened accounts in the A-share market, with individuals reaching 16,735, accounting for 12 percent of the total population, data from the Securities Depository and Clearing Corporation Limited showed.

Positive sentiment in China's stock market in June gave a strong boost to investors' confidence and enthusiasm.

Shanghai and Shenzhen stock exchanges in June witnessed a trading volume of 1,188.7 billion shares, with a turnover of 14.46 trillion yuan.

In June, the average daily trading volume on the Shanghai Stock Exchange registered 287.48 billion yuan, up 15.03 percent from the previous month, and the average daily trading volume on the Shenzhen Stock Exchange was 438.67 billion yuan, up 16.98 percent from the previous month.

Source: The Standard

https://www.thestandard.com.hk/breaking ... s--In-June

[winston]

China urged to dump Swift in face of US sanctions

China should prepare for potential US sanctions by increasing use of its own financial messaging network for cross-border transactions in the mainland, Hong Kong and Macau, according to a report from the investment banking unit of Bank of China.

Chinese state lenders have been revamping contingency plans in anticipation of US legislation that could penalise banks for serving officials who implement the new national security for Hong Kong, Reuters reported earlier this month.

Greater use of the Cross-Border Interbank Payment System, instead of the Belgium based Swift system, would also reduce exposure of China's global payments data to the United States, BOC International said in the report, which was coauthored by a former foreign exchange regulator.

The bank's chief economist, Guan Tao, was previously a director of the international payments department of State Administration of Foreign Exchange.

The report looked at potential measures the United States could take against Chinese banks, including cutting off their access to the Swift financial messaging service, a primary network used by banks globally to make financial transactions.

Source: The Standard

https://www.thestandard.com.hk/section- ... -sanctions

[winston]

An Undervalued Sector Adored by Warren Buffett

by Jody Chudley

Altogether, Buffett has more than $40 billion invested in shares of publicly traded American banks.

I have been bullish on the banks in recent months for two specific reasons…

Reason No. 1: Bank balance sheets were in phenomenal shape going into the COVID-19 crisis, and I believe they can comfortably withstand the hit they are taking.

Reason No. 2: Their valuations aren’t just cheap – they are historically cheap.

In recent years, Bank of America has mostly traded at 1.2 times book value. Today, the bank trades at just 0.87 times book value.

Source: Wealthy Retirement

https://dailytradealert.com/2020/07/31/ ... n-buffett/

[winston]

not vested

Singapore Banks – Gradual easing out of the pandemic

The recent results of Singapore banks’ largely met lowered expectations, with net interest margins (NIMs) pressure continuing to feature as a common thread.

2Q sector NIMs compressed 17-24bps quarter on quarter to 1.5%-1.6, making new lows.

Credit costs guidance for FY20-21E was maintained, with provisions to remain elevated to prepare for higher credit risks ahead.

Earnings momentum was soft, unsurprising amidst the worst quarterly economic contraction in Singapore on record in 2Q20.

Positives included still-steady non-performing loan (NPL) ratios (although this ratio looks likely to pick up as the effects of policy support measures fade) and collateral values, supported by the slew of policy measures.

While the pressure on NIMs should continue into 3Q, the pass-through impact from the Federal Reserve’s aggressive rate cuts in March this year should taper over the course of 2H20, with a possible bottoming in NIMs coming through.

Given the expected gradual pace of recovery and a prolonged low rate environment weighing on sector profitability, we believe it would not be realistic to expect special dividends this year, and we see the possibility of an extension of MAS’ dividend restrictions into FY21E.

While asset quality concerns are likely to remain an overhang on the sector into FY21E, capital positions should remain solid.

Undemanding sector valuations also provide a more balanced risk reward proposition for patient long-term investors to accumulate positions in stages.

Following our recent upgrade in DBS Group Holdings’ fair value (Hold, fair value SGD22.50, Decent operating performance), the share price has gained and is currently rated Hold.

The better near-term share price performance of DBS over United Overseas Bank (Buy, fair value SGD21.50, Waiting for better days) could be sustained by an improving outlook on DBS’ Greater China exposure (which is geographically better placed in terms of pandemic management and recovery trajectory) while UOB’s 2Q higher moratoriums from its regional loans exposure should need some time to work through, particularly in its Malaysia and Thailand markets.

Source: OCBC

[winston]

China's biggest banks suffer profit decline

The worst decline in more than a decade as a cascade of loans to businesses across China are going bad.

Authorities have required lenders to forgo 1.5 trillion yuan ($218 billion) in profit by providing cheap funding, deferring payments and increasing lending to small businesses struggling with the pandemic.

Source: OCBC

[winston]

BofAS: CN Banks' Fundamentals Improve, Valuation Nears Historical Low

China's banking sector saw improved fundamentals and macro economy, opined BofA Securities.

As an illustration, the country's overall credit growth sped up to 13.5% from 13.2% in January.

With Chinese lenders' valuation nearing historical trough, the broker believed it would be a good buying opportunity for investors.

Source: AAStocks Financial News

[winston]

Banks moved US$2 trillion, defying money laundering orders: ICIJ

by Yueqi Yang

(Sept 21): A new investigation by the International Consortium of Investigative Journalists says JPMorgan Chase & Co., Deutsche Bank AG and several global banks “kept profiting from powerful and dangerous players” in the past two decades even after the U.S. imposed penalties on these financial institutions.

JPMorgan moved more than US$1 billion for the fugitive financier behind Malaysia’s 1MDB scandal, based on records. The bank also processed payments for Paul Manafort, the former campaign manager for President Donald Trump, after he resigned from the campaign amid money laundering and corruption allegations from his work with a pro-Russian political party in Ukraine, according to the investigatio

Source: Bloomberg

https://www.theedgemarkets.com/article/ ... rders-icij

[winston]

China’s biggest banks may follow HSBC in trimming dividend payout amid biggest earnings setback since 2008 crisis

A 10 per cent decline in earnings may result in zero dividend for bank investors, according to Jefferies

Some Chinese banks may have no room to raise fresh capital from the stock market if their price-to-book value ratios dip below one

Source: SCMP

https://www.scmp.com/business/banking-f ... g-dividend

[winston]

Arthur Yuen: HK Banks Facing 3 Key Headwinds; Credit Risks Cooling Down

Hong Kong banks will, over the coming 6-12 months, face three major headwinds:-
1. Credit Risks
2. Operation Challenges and
3. Landscape Changes
said HKMA Deputy Chief Executive Arthur Yuen.

Amid the coronavirus crisis and geopolitical threats, the ratio of problematic loans is on the rise in Hong Kong, of which the rate has somehow slowed in the second quarter from the first's, added Yuen.

Source: AAStocks Financial News