Market Insight | China Merchants Bank rises more than 3%, leading the gains in domestic banking stocks. The high dividend yield of banks still remains attractive for investment
China Merchants Bank rose more than 3%, leading the gains in domestic bank stocks, with Postal Savings Bank of China and Bank of China also seeing increases. Data released by the central bank shows that the year-on-year growth rate of social financing stock is 8.1%, with both new social financing and loans increasing. Analysis suggests that the attractive value of high dividend bank stocks is drawing interest, and it is expected that social financing and credit data will stabilize and rise. The fundamental performance of the banking industry for the whole year is expected to be stable, possibly leading to the introduction of interest rate reduction policies, with bank stocks poised to achieve excess returns
According to the latest information from the Wise Finance APP, domestic bank stocks are generally rising. As of the time of publication, China Merchants Bank (03968) rose by 3.06% to HKD 30.35; Postal Savings Bank of China (01658) rose by 2.18% to HKD 4.22; Bank of China (03988) rose by 1.76% to HKD 3.46; and Bank of Communications (03328) rose by 1.7% to HKD 5.38.
On the news front, on September 13th, the central bank released the social financing and financial statistics for August 2024. The stock of social financing in August increased by 8.1% year-on-year, with an additional social financing of 302.98 billion yuan and new RMB loans of 900 billion yuan. Minsheng Securities pointed out that at the current stage, the growth rate of the overall financial indicators has stabilized, and the central bank has stated that its supportive monetary policy stance remains unchanged, providing good support for stable economic growth. On the other hand, the government's investment efforts continue to increase, which is expected to provide some support to social financing. Due to expectations of interest rate cuts on existing home loans and the disclosure of interim results, the sector has experienced some recent corrections. However, in the process of stabilizing and improving the economy, the high dividend value of bank stocks remains attractive.
Oriental Securities, on the other hand, mentioned that in Q3, attention should be paid to the possibility of accelerating fiscal pace. Considering the weakening impact of anti-speculation measures and manual interest rate cuts, it is expected that social financing and credit data will stabilize and rebound. The bank's performance fundamentals are expected to remain stable throughout the year, ensuring dividend payouts. Taking into account the expected rate cut by the Federal Reserve in September and the pressure on domestic economic operations, the bank predicts that an interest rate cut policy may be introduced in October. The broad spectrum interest rates across society are expected to continue to decline, and bank stocks are likely to once again outperform with excess returns