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<Research>G Sachs: Mainland Cross-border Investment Rules, Account Reviews Have Limited Earnings Impact on HSBC HOLDINGS, STANCHART
Recommend 30 Positive 46 Negative 21 |
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Since May 21, the share prices of HSBC HOLDINGS (00005.HK) and STANCHART (02888.HK) have underperformed the STOXX Europe 600 Banks Index (SX7P) by about 5% and 7%, respectively, Goldman Sachs said in its report. This mainly reflects investor concerns over a slowdown in deposit inflows into Hong Kong and potential restrictions on the two banks’ engagement with Mainland clients. However, the broker believed the recent share price underperformance is not consistent with the potential earnings impact of the announced measures and changes, and instead stems more from market uncertainty over possible future policy shifts. Goldman Sachs’ analysis showed that for typical accounts held in Hong Kong by Mainland residents, around 90% of deposits originate from offshore sources (such as Singapore or other Hong Kong channels), with only about 10% directly coming from Mainland bank accounts. Based on its sensitivity analysis, under an extreme adverse scenario in which the 10% of net new money (NNM) inflows from Mainland sources were to cease entirely, assuming current HIBOR at about 2.7% and a margin of 300 bps on those funds, the potential annualized impact on PBT would be only about 1% for HSBC HOLDINGS and 2% for STANCHART. The overall earnings impact would therefore be very limited. Goldman Sachs set a 12-month TP of HKD165 for HSBC HOLDINGS (00005.HK) and HKD242 for STANCHART (02888.HK), maintaining Buy ratings on both. Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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