[ET Net News Agency, 20 September 2018] HSBC Global Research said stock-pledged lending
(SPL) has overtaken margin financing and become a key business for the Chinese brokers.
However, the falling stock market has led to a slowdown in growth and a weaker credit
quality. The research house estimated that around RMB200bn of the brokerage industry's SPL
portfolio may be at risk of margin calls.
Although some administrative rules have helped reduce risk in the near term, HSBC
believes they could also lead to a lengthy and painful adjustment process. It cut its 2019
net profit forecasts by an average of 23% and its target prices by 26% on average. It also
downgraded some of the stocks as follows:
Name Target Price Rating
-------------------------------------------------
CITICS (06030) HK$18.2 to HK$14.4 Hold
GTJA (02611) HK$20.5 to HK$17.0 Buy to Hold
Haitong (06837) HK$12.6 to HK$7.8 Buy to Hold
HTSC (06886) HK$20.0 to HK$13.5 Buy
GFS (01776) HK$18.8 to HK$13.2 Buy
CMS (06099) HK$15.0 to HK$9.6 Buy to Hold
CGS (06881) HK$6.3 to HK$3.8 Buy to Hold
CICC (03908) HK$16.5 to HK$16.2 Buy
(KL)