Bank of Communications Issues 30 Billion Yuan in Tier-2 Capital Bonds
Bank of Communications Bolsters Capital With Bond Issue
Express News | Bank of Communications: Successfully issued 30 billion yuan subordinated capital bonds.
China: Consumer goods in the Mainland could lead to GDP growth by 0.3 percentage points, or increase household appliance sales by 15%
China's Ministry of Finance issued a notice on “Certain Measures to Support Large-Scale Equipment Upgrades and Replacement of Consumer Goods” by the National Development Reform Commission and the Ministry of Finance. Proposed the coordination of around RMB 300 billion (below) in ultra-long term special government debt financing, and strongly supported large-scale equipment upgrades and the replacement of old consumer goods. This indicates a further decline in positive fiscal policy, which the Bank expects could drag down GDP growth by around 0.3 percentage points.
Morgan Stanley: Focus on managing net interest spread as internal banks confirm lowered deposit rates.
JPMorgan released a report stating that the announcement by six large state-owned banks of a reduction of deposit interest rates on the previous day (25th) was not unexpected, based on earlier media reports. The bank reiterated its positive view on China mainland banking, based on the narrowing net interest margin gap of two basis points resulting from the reduction of deposit interest rates and loan market quote rates (LPR), which is estimated to increase the bank's earnings by 2% next year. The rapid reduction of deposit interest rates also confirms the bank's view that regulatory authorities and banks are more focused on stabilizing the net interest margin. The bank believes that future interest rate cuts will be symmetrical, and the reduction of deposit interest rates will be accompanied by a reduction in LPR. The bank also noted that regulatory authorities are cracking down on banks' artificial intervention in interest rates, including deposits.
A-shares bank stocks fell sharply, with ICBC falling by 3%.
On July 26th, Bank of Communications fell more than 3%, while Industrial and Commercial Bank of China and Agricultural Bank of China both fell 3%. Shanghai Pudong Development Bank, Postal Savings Bank of China, Bank of Nanjing, and China Construction Bank Corporation also followed the decline.
Bank of Communications (03328.HK) Hong Kong Branch issued a 2.7 billion yuan two-year bond with an interest rate of 4.08%.
Bank of Communications (03328.HK) (601328.SH) Hong Kong Branch successfully issued 2.7 billion yuan of two-year senior unsecured bonds today (26th), with a yield of 4.08%. The bond is issued in RegS form, aiming to optimize the capital structure, provide a source of income for investors, and reflect its activity in the capital markets. The bonds issued this time has received Moody's A2 stable, S&P A- stable, and Fitch A negative rating.
Government bond futures hit a new historic high yesterday. Analysis suggests the fundamental aspects of the market still support a further decline in bond yields.
According to a report from the Shanghai Securities News, the national bond futures hit a new historic high following the news of a state-owned bank lowering deposit rates and the central bank lowering MLF operational rates by 20 basis points. Yesterday (25th), the main contract for the 30-year national bond futures rose by 0.4%, setting a new closing high, while the main contract for the 10-year national bond futures fell slightly but still reached a historic high during the trading day. Analysts believe that although short-term interest rates have significantly declined after the interest rate cut, long-term interest rates remain relatively restrained, but fundamental factors still support further declines in bond yields. In the current market sentiment and policy environment, institutions suggest that investors be cautious in bond investment and avoid excessive operations.
Hang Seng Index fell by 306 points, Meituan dropped more than 5%, and resource and energy stocks were weak.
The USD/JPY exchange rate fell to the edge of 152, triggering a global stock market decline due to arbitrage trading and unwinding. As for the Hong Kong stock market, the Hang Seng Index opened low by 50 points and the decline expanded. It fell to 16,964 points after a drop of 346 points, and closed at 17,004 points, a decrease of 306 points or 1.8% for the whole day. The national index fell 125 points or 2.1%, closing at 6,016 points. The Hang Seng Tech Index fell 69 points or 2%, closing at 3,421 points. The total turnover of the market for the day was HKD 105.734 billion, with a net outflow of RMB 0.36 billion and 1.64 billion in the southbound trading under the Shanghai and Shenzhen-Hong Kong Stock Connect. The chip equipment manufacturer ASMPT (00522.HK) fell after its performance announcement yesterday.
Express News | The Bank of Communications has lowered its deposit execution rate to a maximum of 2.45%.
A new round of deposit "rate cuts" has begun: the six major banks have jointly lowered interest rates, and small and medium-sized banks will soon follow suit. Experts warn that we need to be cautious of the problem of attracting deposits.
The six major state-owned banks collectively announced a reduction in deposit interest rates. Compared with the previous two adjustments, the reduction this time has been slightly weakened, but the coverage is wider, and the current deposit interest rate is included in the scope of the reduction. Experts believe that the trend of deposit regularization has eased recently. After the new round of deposit interest rate reduction starts, other banks will follow suit and adjust; looking forward, there is still a possibility of further reduction in domestic deposit interest rates.
Express News | The recent banks' deposit interest rate cuts are conducive to stabilizing banks' liabilities and reducing costs, bullish for corresponding stocks' valuations.
Hong Kong stocks fluctuate | CM Bank (03968) falls more than 4%, leading the decline in China Mainland Banking. The central bank optimizes the interest rate system, but the interest rate spread of banks still continues to narrow.
China mainland banking stocks continued to decline in the morning session. As of press time, CM Bank (03968) fell 4.2%, to HKD 31.95; Minsheng Bank (01988) fell 3.94%, to HKD 2.68; Bank of Communications (03328) fell 2.93%, to HKD 5.64; and China Construction Bank Corporation (00939) fell 2%, to HKD 5.39.
The six major banks collectively announced a reduction in deposit interest rates, the highest being a decrease of 20 basis points. Experts believe that stabilizing the cost of debt will have limited impact on ordinary depositors.
On July 25th, the six major state-owned banks, including Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank, collectively lowered the deposit interest rates of RMB, with a reduction range of 5 to 20 basis points. Experts believe that this adjustment is based on the previous decline of the 1-year LPR and the trend of market interest rates such as the national bond yield that the six major banks have autonomously decided to make. The interest rate adjustment is conducive to stabilizing the cost of liabilities, promoting investment and consumption, but it is expected to have limited impact on ordinary depositors.
Citigroup's investment rating and target price for China mainland banking stocks in "Great Banks" (Table).
Citigroup released a research report on China mainland banking, and the investment ratings and target prices are listed as follows: Stock | Investment rating | Target price (Hong Kong dollar) Industrial and Commercial Bank of China (01398.HK) | Buy | HKD 5.52 China Construction Bank Corporation (00939.HK) | Buy | HKD 7.15 Bank of China (03988.HK) | Buy | HKD 4.54 Agricultural Bank of China (01288.HK) | Buy | HKD 4.15 Postal Savings Bank of China (01658.HK) | Buy | HKD 4.84 Bank of Communications (03328.HK) | Buy
Express News | The ultra-low interest rate has arrived, and the deposit interest rates of the six major banks have been lowered.
Expert: Unexpected increase in MLF operations meets the medium- and long-term fund needs of financial institutions.
The People's Bank of China announced today (25th) the one-year MLF operation of CNY 200 billion through interest rate auction, with the winning interest rate down 0.2 percentage points from the previous time to 2.3%. This is the second MLF operation conducted by the People's Bank of China this month, and the MLF interest rate has been lowered for the first time since August 2023. This increased MLF operation meets the medium and long-term funding needs of financial institutions. According to expert sources cited by The Paper, with the upcoming end of the month, the liquidity demand of financial institutions has significantly increased, and there is some upward pressure on the interest rates in the currency market, with some institutions participating in the MLF.
Breaking News! The four major banks collectively announced: Downward adjustment!
The 5-year fixed deposit has officially entered the "1" era.
Citi: Initiated a 30-day positive catalyst watch on Agricultural Bank of China (03618.HK), and negative catalyst watches on Bank of Communications (03328.HK) and China Merchants Bank (03968.HK).
According to Citigroup's report, as a theme of income-generating investment, China mainland banking has been the best-performing sector in the A-share market so far this year, with a 21% increase from the beginning of the year, compared to only a 2.3% increase in the CSI 300 index. Among them, regional banks with convertible corporate bonds have performed particularly well, as the management is incentivized to release profits by converting convertible corporate bonds or supplementing capital, thereby driving profit growth faster than peers. Citigroup has initiated a positive catalyst observation for CQRC Bank (03618.HK) for the next 30 days, and a negative catalyst observation for Bank of Communications (03328.HK) and China Merchants Bank (03968.HK).
Express News | State-owned major banks have lowered deposit interest rates for the first time this year.
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