Financial Industry 07 (Jul 18 - Dec 24)

[winston]

China creates its largest brokerage to take on Wall Street

China is combining two of its largest state-backed brokerages to create a new behemoth as it seeks to consolidate the US$1.70 trillion (RM7.37 trillion) sector and build stronger investment banks to compete with overseas financial firms.

Guotai Junan Securities Co will merge with smaller rival Haitong Securities Co through a share swap, according to statements from both companies on Thursday.

The combination of the firms, both partly owned by Shanghai’s state assets administrator, will create a new entity with assets of 1.6 trillion yuan (US$230 billion or RM978.51 billion), topping Citic Securities Co as the largest brokerage.

Source: Bloomberg

https://theedgemalaysia.com/categories/malaysia

[behappyalways]

On the left we have the Great Financial Crisis of 2008

On the right we have WTF DO WE CALL THIS
https://x.com/ValEricaorAmy/status/1830514684585214006

[behappyalways]

This is one reason we haven't seen more aggressive rate cuts from the PBoC in China.
https://x.com/AyeshaTariq/status/1831293159214620950

[winston]

<Research>UOB Kay Hian Says CN Banks Interim Earnings Generally in Line; Top Pick CM BANK (03968.HK)

UOB Kay Hian commented in its recent report that the 1H24 earnings of Chinese banks were largely in line with expectations.

The broker estimated that the cumulative reduction in mortgage rates by 80 bps will impact next year's earnings of Chinese banks by 6.5 bps or 9.2%.

UOB Kay Hian maintained an Overweight rating on Chinese banks, noting that macro headwinds and the mortgage repricing news could affect stock prices.

However, after the recent correction, the valuation of such stocks has been depressed and the dividend yields rebounded, which may bring a ray of hope for defensive stocks.

The broker selected CM BANK (03968.HK) as its top pick, stating that even though CM BANK has higher mortgage risk, with its higher NII contribution, financial indicators (including ROE, asset quality, and provision buffer) remaining superior to peers, and a dividend yield of 7.2%, the impact on its potential earnings is relatively lower than that of state-owned banks.

Believing that CM BANK has ample buffer capital to maintain its dividend level, UOB Kay Hian gave it a Buy rating with a TP of $42.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

CHN: Banks (NEUTRAL) - What could Rmb1tr of capital be used for? (27/9)

We think a Rmb1tr capital injection into China’s six SOE banks, should it materialise, can be levered by >12x to help fund >Rmb12tr of new loans.

We believe this leverage factor would be greater now than the 2009 economic stimulus, due to internal-rating based models adopted by banks.

A Rmb1tr capital injection could thus be a pre-emptive move to fund strong loan growth, though many questions still remain about execution.

Maintain sector Neutral weighting. Top picks are CCB, BOC, CMB and CITIC.

Source: CIMB

https://rfs.cgsi.com/api/download?file= ... DDD49DEFB5

[behappyalways]

UNREALISED LOSSES BY U.S. BANKS
7x HIGHER THAN 2008 FINANCIAL CRISIS
https://x.com/RadarHits/status/1838561187761398247

[winston]

The Bank Stock Rally Is Just About Over

by Jeff Clark

Readers who bought bank stocks two weeks ago based on the bullish technical setup should take profits now. The next big move for the sector looks like it will be lower.

Source: Jeff Clark Trader

https://tradesoftheday.com/2024/10/23/t ... bout-over/

[winston]

Mainland banks face higher loan risks

Stress arising from retail loans and inclusive micro and small enterprise lending has caused the bad loan ratios related to personal borrowers and credit cards to rise.

The loans to micro and small businesses accounted for 13 percent of China's banking system.

Rural banks are most exposed to lending to micro and small enterprises, facing higher risks due to borrowers' lower income levels and weaker collateral.

The underlying asset-quality deterioration could exceed reported figures, due to various forbearance measures including loan extensions until 2027.

The balance of loans to small and micro-enterprises nationwide increased 14.7 percent year-on-year to 32.58 trillion yuan (HK$35.65 trillion) as of September.

Source: The Standard

https://www.thestandard.com.hk/section- ... loan-risks

[behappyalways]

Investors really love financials here. The promise of less regulatory scrutiny under the Trump admin is one driver of inflows, which were the largest since February of 2022 over the last four weeks!
https://x.com/Mayhem4Markets/status/1860709960390201421