Market Insight | STANCHART falls more than 6%, leading the decline in Hong Kong bank stocks. Rate cut expectations raise concerns about narrowing net interest margins for banks
Hong Kong bank stocks plummeted in early trading. As of the time of publication, Standard Chartered fell by 6.75% to HKD 67.65, HSBC Holdings fell by 4.18% to HKD 63, Hang Seng Bank fell by 2.37% to HKD 88.6, and Bank of East Asia fell by 2.17% to HKD 9.46. On the news front, the U.S. added only 114,000 jobs in July, lower than expected, and the data for the previous two months was also revised downward. The unexpected rise in the unemployment rate for the fourth consecutive month to 4.3%, the highest level in nearly three years, has raised concerns about a U.S. economic recession. JPMorgan Chase and Citigroup expect the Federal Reserve to start aggressive easing measures within the year, with rate cuts of 50 basis points in September and November, followed by another 25 basis points cut in December. Liao Zhiming, Chief Analyst of the Banking Industry at China Merchants Securities, pointed out that the decline in the stock prices of foreign banks reflects investors' concerns about the future profitability prospects of banks, especially as major economies around the world enter a rate-cutting cycle, leading to a narrowing trend in banks' net interest margins and further increasing concerns about the decline in banks' profitability. In addition, HSBC Holdings also mentioned in its semi-annual report the impact of rate cuts on bank operations
According to the information from the Wise Finance APP, Hong Kong bank stocks plummeted in the morning session. As of the time of publication, Standard Chartered (02888) fell by 6.75% to HKD 67.65; HSBC Holdings (00005) dropped by 4.18% to HKD 63; Hang Seng Bank (00011) declined by 2.37% to HKD 88.6; and Bank of East Asia (00023) decreased by 2.17% to HKD 9.46.
On the news front, the U.S. added only 114,000 jobs in July, lower than expected, and the data for the previous two months was also revised downward. The unexpected rise in the unemployment rate for the fourth consecutive month, reaching 4.3%, marks the highest level in nearly three years. Weak employment data has raised concerns about a U.S. economic recession. JPMorgan and Citigroup predict that the Federal Reserve will start aggressive easing measures within the year, with 50 basis points rate cuts in September and November, followed by another 25 basis points cut in December.
Liao Zhiming, Chief Analyst of CMB International Securities, pointed out that the decline in the stock prices of foreign banks reflects investors' concerns about the future profitability prospects of banks, especially as major economies around the world enter a rate-cutting cycle. The narrowing trend of net interest margins for banks further increases worries about the decline in banks' profitability. In addition, HSBC Holdings also mentioned the impact of rate cuts on bank operations in its semi-annual report