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KIM ENG COMMENTARY
After the market close, PBOC announced a 25 bps hikes in both 1-year lending rate and 1-year deposit rate. Interest rates for other tenor were also adjusted. Note that saving rates are kept unchanged.
This is the first interest rate movement made by PBOC since 23rd Dec 2008, amid the financial crisis. On that day PBOC cut both the 1-year lending and deposit rates by 27bps.
The direction of interest rate movement is well expected by market, but the timing is unexpected, while the structure of the interest rate hike is also interesting.
Our analyst comment:
* Timing: The rate hike happened just after the 12th 5-year plan conference, which may trigger some speculation in change of monetary polices. We
believe that it is too early to say this, and still believe that this round of rate hike DOES NOT mean China is entering into a rate hike cycle with frequent and rapid interest rate hikes.
* Structure: We always argue that the structure of the interest rate hike is more important than the hike itself. Note that previously there were rumors on asymmetric rate hike, i.e. raising deposit rate but keeping lending rate unchanged (which is obviously bad news to banks). This turned out to be false. Market’s concern on asymmetric rate hike should fade.
* Also note that saving rates were kept unchanged. This is important to the banks: On the funding side, the cost of saving deposit (typically 40-60% of total deposits), only the cost of time deposit will rise. While on the asset side, the yield of all of their loans will rise.
* Effect: In short, the latest PBOC move should be moderately positive to the bank’s margins.
* On the volume side, note that the mainland banks’ volume growth is almost inelastic to interest rate movement. Volume growth was mainly controlled by government instead.
* Who is going to benefit: The banks with high loan/deposit ratios, and the banks with high portion of saving deposits are likely to benefit most.
Bocom, CITIC Bank, CMB and BOC are likely to benefit most.
* The rate hike should be positive to insurer as well. We believe that PICC is going to benefit most.
* Other implications: While the rate hike itself is moderately positive to the banks, we expect the market to react negatively. The weakness in overseas market, and the recent strong rally in China and HK market would trigger some profit taking.
* Inflow of hot money, and strength in Rmb may continue after the rate hikes.
* The upcoming CPI and GDP figures (both due on 21st Oct, Thu) may surprise the market on upside.
Approximately at wat px. is good to sell, thanks.
Juzztrade ( Date: 20-Oct-2010 10:05) Posted:
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It is there!
I am still holding.
your wife should intoxicated you every day..... so carlsberg or tiger is nothing lah.....
elton81 ( Date: 20-Oct-2010 00:16) Posted:
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Still going strong. Could be future blue chip, my view only.
Congrat and good luck.
elton81 ( Date: 19-Oct-2010 17:48) Posted:
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Dear comrade, generally, for a small retailer, a profit of K is meant to them, esp they r new in trading/investment. However, there is no hurry to exit when d market situation is running good. Dun waste the comms money.
Be vigilant is the call. AK now making paper gain of 100 over K also dun sell, jangan tension loh, relax lah. On d other hand, of course, if need cash urgently, then thats another issue liao. Thats much depend how to manage own finance status loh. At times, really hard to decide one, ds is way of life mah.
elton81 ( Date: 20-Oct-2010 00:16) Posted:
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so to say...not good to go in again?I also earned my kopi money..
But, greed is calling me...
On the other hand, I agreed with Elton...
a)MIT starts on Thurs..
b)Today DOW downs 90+ points as China interests hikes, BOA mass loss..
c) There are other outstanding stocks for profits-gain...
No one knows what happen tml...
for those thinking of vesting into this counter ... well be safe.. and caution... exit when there's enough profit.. dont be too greedy.. or u wont know what is coming.... when retailers starts to swarm back into the picture... that's when the BBs are getting ready to exited the counter.. and let u all play roller coaster..i'm happy with my profit.. and gd lucks to the rest of ya vested :) oh ya.. there's still mapletree coming up on thurs... gonna shift my milk powder earning fund into it.. lolz
lol thanx bro.. well.. the 1k is credited into my wife's account.. so really is 100% milk money or mayb.. shopping $$.... :( cant buy any calsberg or tiger for myself.. haha
epliew ( Date: 19-Oct-2010 18:41) Posted:
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tomorrow still can enter,by nxt week will hit 2.3 at least ? may try
congratulation brother,
u really make lots of milk powder money..... u should make more babies.
elton81 ( Date: 19-Oct-2010 17:48) Posted:
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| 17:05:03 | 2.290 | 479,000 | Buy Up |
| 17:05:02 | 2.290 | 1,864,000 | Buy Up |
today close 2.29 liao
2.5 think... TOMORROW!!
Earn 1k
AnthonyTan ( Date: 19-Oct-2010 17:40) Posted:
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Those who bought yesterday 18.10.10. at $2.15/$2.16
make $$$$$$$$ lol.
ya lor, i regrets! after i sell it off then i was thinking, all the 1 lotters sell down, means someone must be consolidating. and once it consolidate over, means price rise. but too late, my brain tick too slow, if really hit 2.3- 2.5 within 1 month i will cry sia. this is the only ipo that i sold on the same day it listed and big mistake. lol
so u were one of em who sold to me at 2.15!
anyway, now still can enter, i think by nxt week will hit 2.3 at leastbladez87 ( Date: 19-Oct-2010 11:59) Posted:
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collect ASAP!
short mid term think will hit at least 2.5
AIYA! i sold at 2.15! sadded! only after selling then i realised i fell into the herd mentality. sad