Morgan Stanley: Bullish on HSBC HOLDINGS (00005) and STANCHART (02888) among financial stocks in Asia-Pacific, benefiting from dividends and share buybacks.

Morgan Stanley released a report on the financial industry in the Asia Pacific region, stating that they are bullish on banking stocks in Singapore and Hong Kong, which offer high total shareholder returns, but are not as positive on banking stocks in the ASEAN region. The bank expects macro events to dominate the outlook for banks in the Asia Pacific region in the second quarter of this year. Debate may revolve around the impact of interest rates, uncertainties which may cause investors to focus on defensive stocks, and potential tariffs that could directly affect mainland China (and consequently impact Hong Kong) and influence the relocation of supply chains to ASEAN. In this environment, the bank expects banking stocks in Singapore to perform well. If measures are taken to revitalize the Singapore stock market, the cost of equity may also decrease, potentially benefiting the Singapore Exchange (SGX). DBS Bank is the bank that Morgan Stanley is most bullish on in Singapore. Among the banking stocks listed in Hong Kong, Morgan Stanley is positive on HSBC Holdings and Standard Chartered, as they benefit from dividends, stock buybacks, and a high sustained return on equity, which will support the stock prices of these two banks. Morgan Stanley has a "overweight" rating on HSBC with a target price of 92.3 Hong Kong dollars, and a "overweight" rating on Standard Chartered with a target price of 128.3 Hong Kong dollars. The bank also favours the Singapore Exchange (SGX), DBS Bank, HSBC, Standard Chartered, BDO Unibank, and Bank of the Philippine Islands in the financial industry in the Asia Pacific region. Stocks that are least favoured include Hang Seng Bank and BOC Hong Kong.