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<Research>M Stanley Foresees HK Banking Sector to Face Negative Momentum, Still Prefers HSBC HOLDINGS/ STANCHART
Recommend 39 Positive 57 Negative 30 |
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The 2Q25 results of Hong Kong banks were dominated by the decline in HIBOR and deteriorating credit quality in the local commercial real estate sector, though increased wealth management and market income helped offset earnings pressure, according to Morgan Stanley's research report. In the broker's estimate, the environment will remain challenging in 2H25, with HIBOR only likely to recover in 4Q and ongoing pressure on credit quality. Morgan Stanley also mentioned that market income had a strong start in 3Q, and earnings outlooks will continue to rely heavily on this segment. Negative momentum is expected to occur among local banks, while international banks will remain solid. Morgan Stanley believes Hong Kong banks have already reached their limits in terms of valuation, especially HANG SENG BANK (00011.HK). Meanwhile, BOC HONG KONG (02388.HK) is better supported by its dividend. That said, when comparing their valuations to their peers', the broker continued to rate both banks as Underweight. In contrast, the broker maintained its preference for HSBC HOLDINGS (00005.HK) and STANCHART (02888.HK), citing undemanding valuations, supportive capital returns, and positive structural stories. Stock│Investment Rating│Target Price (HKD) BOC HONG KONG (02388.HK)│Underweight│24.7 -> 31.4 HANG SENG BANK (00011.HK)│Underweight│93 -> 94.5 HSBC HOLDINGS (00005.HK)│Overweight│107.1 STANCHART (02888.HK)│Overweight│158.6 AAStocks Financial News |
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