[ET Net News Agency, 13 December 2017] Goldman Sachs said the recent HIBOR move and a
widely anticipated Fed rate hike have shifted investor focus to prime lending rate hikes
for HK banks.
The research house doesn't expect the banks to raise prime rates this week but it said
that "we are getting closer to the first move up since 2006".
The prime and Fed funds rate gap has been closing over the last two years as the Fed has
lifted rates. Goldman expects a prime move around the middle of next year when funding
costs for the banks would have shown a more sustained movement.
On the asset side, the research house is beginning to see some encouraging signs of
upward repricing. A prime rate hike would be a strong signal that banks would want to
reprice the assets up, which would in turn lead the market to price in bigger margin
improvement for the banks.
The HIBOR level is approaching the sweet spot for bank share prices and Goldman expects
banks to outperform during 2018 driven by rate moves and a reasonable valuation starting
point. (KL)
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02356 DAHSING BANKING
Nominal 
6.290 0.000 (0.000%) Others
13/12/2017 17:53
[I-bank focus]Goldman expects banks to outperform in 2018
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