[ET Net News Agency, 23 July 2018] HSBC Global Research noted that Chinese media
reported on 20 July that the CBIRC may soon announce implementation details for WMP and
the guidelines could be more accommodative than market expectations.
If correct, the research house believes the news should help reduce concerns on credit
supply chain & asset quality - the market was concerned that WMP deleveraging, alongside
reduced macro certainty on trades might cause significant asset quality deterioration
for China banks.
With a sharply reduced interbank rate and a more accommodative stance on WMP
regulations, worries on liquidity, credit supply as well as asset quality may subside,
HSBC said.
On the flipside, HSBC said an accommodative regulatory stance could mean China banks
will need a longer time to narrow credibility discount vs EM Asian banks.
HSBC believes CM Bank (03968) will be favoured among mid-cap banks, and ICBC (01398) be
favoured among large bank near term; these two banks have larger-than-peer exposure to
WMPs, and their share prices corrected more than peers over the last two months when trade
tension escalated. (KL)