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<Research>HSBC Research: Low HIBOR to Benefit HKEX (00388.HK) More; TP Elevated to $438
Recommend 37 Positive 49 Negative 24 |
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HSBC Global Research issued a research report expecting Hong Kong banks to maintain positive deposit growth in May despite subdued demand for loans, but thanks to IPO fundraising activities and positive overall stock market performance. The broker was particularly bullish on HKEX (00388.HK), BOC HONG KONG (02388.HK) and BANK OF E ASIA (00023.HK). Regarding the decline in HIBOR and its impact, HSBC Global Research said that the 1-month HIBOR spot rate fell to about 0.6%, with an average of 1.72% in May, which was much lower than the average of 3.82% from January to April. The lower HKD interest rate could have a significant impact on banks' income. Based on a sensitivity analysis, the broker estimated that a 100 bps drop in HIBOR could reduce BOC HONG KONG's earnings by 10%. Lower interest rates could lead to more deposits being diverted to investments, which would benefit HKEX and banks' wealth management businesses. Lower HIBOR would benefit HKEX more than banks, the report added. Therefore, HSBC Global Research raised its 2025-2027 EPS forecasts for HKEX by 0.2%/ 2%/ 3.3% each, and elevated its target price to $438 from $413 to reflect higher average daily turnover forecasts and listing-related revenue, partially offset by lower investment income. Stock | Rating | TP (HKD) BOC HONG KONG (02388.HK) | Buy | 38.1 BANK OF E ASIA (00023.HK) | Buy | 12.8 HKEX (00388.HK) | Buy | 413 -> 438 AAStocks Financial News Website: www.aastocks.com |
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