JP Morgan: STANCHART (02888) has a high exposure in the Middle East and is expected to experience a significant pullback.

JP Morgan released a research report stating that an escalation of military tensions in the Middle East is expected to trigger a market-wide risk aversion correction. Among the bank stocks covered by the firm, STANCHART (02888) may experience a more pronounced pullback, mainly due to its high exposure to the Middle East region, with projected contributions of loans and revenue from the UAE accounting for 2.5% and 5.6% respectively by 2025. As of the second quarter of 2025, about 73% of Standard Chartered's loans in the UAE belong to government, public institutions, or the banking sector, hence the overall credit risk is manageable. Furthermore, the report mentioned that HSBC disclosed that its loans and revenue from the Middle East region account for 2.3% and 3.8% respectively. The firm stated that, according to "China Securities", the total amount of loans in the Middle East region is approximately $15.7 billion, representing only about 0.09% of the total loans of the five largest banks. Due to the currently low valuation of domestic banks and China's policy flexibility in responding to macroeconomic shocks, the firm believes that domestic bank stocks will show greater resilience compared to other peers in the region.