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2009-1-8 03:38:00 p.m. HKT, XFNA
DJ MARKET TALK: H-Shr Banks Down; But Fundamentals Say Buy - UOB
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| 1519 [Dow Jones] H-share finance index down 5.4% vs HSI down 3.8%, due to selling pressure on mainland banks after slew of shares sales by strategic investors. While short-term headwinds from such sales may persist, negative impact one-off, says UOB KayHian; "it is simply a matter of time before investors return to evaluating the fundamental outlook." Continues to believe NPL formation will be manageable this year; while declining interest rate environment will hurt NIMs, ability of banks to shift assets from low-yielding PBOC accounts into higher yielding assets such as bonds, loans will help cushion NIM contraction. Despite sector no longer trading at basement prices, still some upside; tips favorite big-cap bank remains ICBC (1398.HK) due to defensive loan portfolio, China Merchants Bank (3968.HK) among smaller banks due to higher growth outlook; also not a state-controlled bank, protected from government policy that may spur larger banks to grant unfavorable loans. ICBC down 6.8% at HK$3.69, CMB off 7.7% at HK$13.60.(RLI) Contact us in Hong Kong. 852 2802 7002; MarketTalk@dowjones.com
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(Delayed by 1 hour)
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