HK Stock Market Move | JP Morgan says market concerns about net interest margin pressure are excessive; HSBC HOLDINGS (00005) and STANCHART (02888) both rise over 3%.

Hong Kong banking stocks rose across the board today. As of press time, HSBC HOLDINGS (00005) rose 3.42% to HK$142.0; STANCHART (02888) rose 3.46% to HK$227.4; BANK OF E ASIA (00023) rose 2.64% to HK$18.29; BOC HONG KONG (02388) rose 1.87% to HK$51.75. On the news front, JP Morgan released a research report stating that Hong Kong banking stocks underperformed the Hang Seng Index and the Hang Seng Finance Sub-index by 4% and 6% respectively in October, reflecting market concerns that deposit competition is squeezing net interest margins and that third-quarter results showed capital erosion caused by rising market yields. The bank believes that market concerns about margin pressure from deposit competition may be excessive, as this is largely banks actively managing funding costs in anticipation of further rate hikes, and HKD liquidity remains ample; in other words, if HIBOR stays below 3% for a longer period, deposit competition may cool, or asset yields may eventually reprice higher, driving net interest margin expansion.