Hong Kong Banks:HSB gives vote of confidence in properties

What's new

    According to Bloomberg, Hang SengBank (HSB: 11 HK, HKD125.9, Hold[3]) has bought a retail property inTuen Mun for HKD180m. HSBalready made additions worthHKD4.7bn in investment propertiesduring 1H13, nearly doubling itsinvestment properties portfolio HoH.

    What's the impact

    Since HSB disposed of itsheadquarter building in Central in2006 (and reduced its investmentproperties by HKD1.5bn) under asale-and-lease arrangement, thebank has not made any additions ordisposals to its investmentproperties. We believe HSB’s recentproperty purchases suggest it maybe more turning more optimistic onHong Kong’s property market.

    How we differ

    While there are concerns in themarket for potential US tapering tohave a negative impact on HongKong’s mortgage quality, we remainmore bullish than the Bloombergconsensus on the sector’s assetquality. We believe HSB is one of themost prudent lenders in Hong Kong,and the bank’s recent propertypurchases reinforce our more bullishstance on Hong Kong’s asset quality.