Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

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Thematic (Sector/Industry)

Singapore Financials / Thematic (Sector/Industry)

While the share price appreciation for the Singapore and Hong Kong banks was not as strong as its U.S. and Japan peers in the post-U.S. election rally, banks in Singapore and Hong Kong saw moderate increases in their share prices. Banks in Singapore and Hong Kong will not benefit directly from long-term positive in a more favorable financial regulatory environment in the U.S. The U.S banks should see a general reduction in regulatory oversight and rules, lower compliance costs and capital requirements and the risk of a break-up of the big U.S. banks. Singapore banks have a regional reach in Asia while Hong Kong banks are limited to domestic operations and those in Greater China.U.S. dollar interbank rates were steady post the election. Similarly, the three months and 12 months Singapore Interbank Offered Rates, or SIBOR, were largely flat at 0.87% and 1.31%, respectively. Likewise in Hong Kong, the Hong Kong Interbank Offered Rates, or HIBOR, were also unchanged. With political uncertainty post the election, a delay in the increase in the federal-funds rate could see net interest margins, or NIM, for the banks to continue to be pressured in the near term. We maintain our NIMs assumption for the Singapore and Hong Kong banks, factoring in largely steady margins for the next two years before increases from fiscal 2018. Over the past 12 months, SIBOR have eased off in the second half of 2016, pressuring asset yields for the Singapore banks, while high liquidity in Hong Kong and weak loan demand saw rising competition in Hong Kong, also leading to weaker asset yields.Analyst: Michael Wu, CAIA

While the share price appreciation for the Singapore and Hong Kong banks was not as strong as its U.S. and Japan peers in the post-U.S. election rally, banks in Singapore and Hong Kong saw moderate increases in their share prices. Banks in Singapore and Hong Kong will not benefit directly from long-term positive in a more favorable financial regulatory environment in the U.S. The U.S banks should see a general reduction in regulatory oversight and rules, lower compliance costs and capital requirements and the risk of a break-up of the big U.S. banks. Singapore banks have a regional reach in Asia while Hong Kong banks are limited to domestic operations and those in Greater China.U.S. dollar interbank rates were steady post the election. Similarly, the three months and 12 months Singapore Interbank Offered Rates, or SIBOR, were largely flat at 0.87% and 1.31%, respectively. Likewise in Hong Kong, the Hong Kong Interbank Offered Rates, or HIBOR, were also unchanged. With political uncertainty post the election, a delay in the increase in the federal-funds rate could see net interest margins, or NIM, for the banks to continue to be pressured in the near term. We maintain our NIMs assumption for the Singapore and Hong Kong banks, factoring in largely steady margins for the next two years before increases from fiscal 2018. Over the past 12 months, SIBOR have eased off in the second half of 2016, pressuring asset yields for the Singapore banks, while high liquidity in Hong Kong and weak loan demand saw rising competition in Hong Kong, also leading to weaker asset yields.Analyst: Michael Wu, CAIA

Southwest Securities Intl Securities (812 HK)

China Financial International Investment (721 HK)

China Ding Yi Feng Holdings Limited (612 HK)

Freeman FinTech Corporation Limited (279 HK)

China Merchants China Direct Investments (133 HK)

China Medical & HealthCare Group Limited (383 HK)

China Smarter Energy Group Holdings (1004 HK)

China Development Bank Intrntnl Invstmnt (1062 HK)

Cosmopolitan International Holdings Limited (120 HK)

Cosmopolitan International Holdings Limited

Haitong International Securities Group (665 HK)

Pacific Century Regional Developments (PAC SP)

China Development Bank Financial Leasing (1606 HK)

Singapore and Hong Kong Banks Sound Post U.S. Election; Interbank Rates Steady