HK Vs Singapore Banks:Rate rise re-rating gone too far?
The expectations of a normalisation of the US yield curve after a decade ofextremely low rates has led to period of strong share price performance for HK& Singapore banks in the expectation of recovering NIM & RoE. In this reportwe look at what we believe is now built into valuations in the context of thevery long-term returns that these two banking systems have achieved. We alsolook at reasons why returns may be structurally lower than those achieved inthe past including leverage, business and geographic mix & accountingdifferences. We conclude that Hong Kong banks now look relatively expensivein a regional context where as Singapore still looks reasonably priced.