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2009-6-30 09:15:00 a.m. HKT, XFNA
DJ MARKET TALK: China Banks' Valuation Still Undemanding - Citi
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| 0859 [Dow Jones] China banks have significantly outperformed broad market in June, with China Construction Bank (0939.HK), China Merchants Bank (3968.HK), ICBC (1398.HK) +19.8%, +12.0%, +10.0% month-to-yesterday vs HSI +2.0%. Outperformance largely driven by sector re-rating with 2 key concerns - narrowing NIM, rising NPL - gradually fade. More outperformance in short term expected with valuation still undemanding; Citigroup says Chinese banks as whole trade at 1.5X P/B vs average of 2.0X since 1990; unlike other sectors, earnings revisions have lagged as analysts remained overly concerned about credit cycle. Adds, "investors themselves remain underweight banks." CCB closed down 0.2% at HK$6.04 yesterday, CMB +0.1% at HK$17.72, ICBC down 1.5% at HK$5.37. (RLI) Contact us in Hong Kong. 852 2802 7002; MarketTalk@dowjones.com
(Delayed by 1 hour)
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