In today’s briefing:
- EQD | Hang Seng Down: How Low Can the Pullback Go?
- Japanese Bigger-Cap Banks – Rates Story Continues, with the Prospect of Equity Holdings Disposals
- CPKF: Initiating our 2025 Estimates
- STI Banks Book S$500M YTD Net Institutional Inflows
EQD | Hang Seng Down: How Low Can the Pullback Go?
- The Hang Seng Index has been rallying for 3 weeks but then last week the rise was halted and the index gave up a good chunk of the gains.
- It seems the index has become quite volatile but this week it could go up again, or otherwise next week, the reversal is imminent given its oversold condition.
- It’s hard to predict if the rally can continue after the bounce, the index seems a bit long-term overbought, albeit short-term oversold. A contradiction, but that is the situation now.
Japanese Bigger-Cap Banks – Rates Story Continues, with the Prospect of Equity Holdings Disposals
- The continued “higher for longer” interest rates in the US, along with widening JGB yields adds weight to the Bank of Japan potentially raising benchmark rates further
- In this report, we expand our coverage of the bigger cap banks’ metrics to include the equity holdings of the top six market caps and the banks’ BoJ deposits
- We see further upside for Japanese bank shares, especially those geared into higher domestic rates and with the potential for equity holdings disposals; we like Resona, Mizuho, SMFG and Concordia
CPKF: Initiating our 2025 Estimates
- We are slightly decreasing our diluted EPS estimate for 2024 by a penny, from $2.20 to $2.19, a 2% gain from 2023’s actual diluted EPS of $2.15.
- Our initial estimate for 2025 is $2.35 per diluted share, representing a 7% gain over our 2024 estimate.
- We expect moderate gains in net interest income in 2024 and 2025 as solid loan growth, estimated at 8% in 2024 and 8% in 2025, will be partly offset by a lower net interest margin.
STI Banks Book S$500M YTD Net Institutional Inflows
- DBS, OCBC and UOB have booked S$500 million in combined net institutional inflow for the 2024 year through to 23 May.
- Combined net interest income (NII) for the trio was S$8.3 billion in 1QFY24, the sixth consecutive quarter combined NII surpassed S$8.0 billion, and up 46% from the combined S$5.7 billion in 4QFY19.
- This compares to the trio averaging 5.8% total returns for the full 2023 year, with S$2.5 billion of combined net institutional outflow.
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