Instant update information:
• Mainland Bank shares
February 16, 2013
Mainland Bank shares trend
February 14, the first trading day of the Year of the Snake, the mainland bank stocks generally rose, Minsheng Bank rose 5.78%, Minsheng Bank in the A-share market fell continuously in the last two trading days before the Chinese New Year holiday.
The Mainland January new loans amounted to 1.1 trillion Yuan, slightly higher than market expectations of 1 trillion Yuan. JP Morgan Chase expects credit expansion to help support economic growth and asset quality. Mainland banking stocks are positive in the short-term.
Credit Suisse increases the target prices of mainland banking stocks across the board. The mainland banking stocks rose about 30 percent from last September’s low, but relative to the banking stocks in other parts of the region, the valuation is still attractive. Although the market has increased mainland banks’ earnings forecasts, mainland banks’ earnings growth forecast is still at low single digit. Credit Suisse expects the basic factors of mainland banks to improve as loan growth accelerates, the net interest margin is expected to broaden, and therefore raised target prices of the mainland banking stocks across the board.
Analyst said the huge amount of credit will help increase the flow of funds for the borrower, the bank asset quality remains good, and banks vigorously explore the small loan market, in order to deal with the negative impact of the two interest rate cuts of the People's Bank of the last year to help improve the net interest difference.
As the central government’s new leadership is about to take over, the market expected the government to launch policy favorable to the mainland banks. The analysis indicates that the Mainland's monetary policy will remain neutral tending to the loose side. After mainland bank shares experienced an average of 10% drop over the past week, the share price has a good chance to come back strong.
Loan growth analysts expect ICBC (1398) strong capital inflows will drive the ICBC back to above the 50-day average. Credit Suisse gave ICBC "outperform" rating, target price raised to 7.09 yuan.
The analyst sees mainland banks still have an interest return of 4 to 5% with room to rise further, and therefore is optimistic about the mainland bank shares, but due to strong increases earlier in second-tier mainland banks, it is recommended that investors pay attention to the four major banks. Investments of mainland insurance companies will underperform Mainland banks. They will be left behind mainland banks in a rising market.
|