Hong Kong banking stocks outperformed the market in June, with regional banks relatively dominant. the report highlights HSBC Holdings (J.P. Morgan)
J.P.
J.P. Morgan reported that the average stock price of Hong Kong banking stocks fell by 5% in June, but still outperformed the Hang Seng Index by 4%. Among them, regional banks performed better than local banks as their operating trends improved and the Fed's hawkish stance boosted net interest margin expectations. In terms of industry fundamentals, loan and mortgage growth continues to rebound, the non-performing loan ratio (NPL) has dropped to a new low in the eighth quarter, asset quality is stable, SOFR-HIBOR spreads have narrowed, and deposit competition is rational. The report believes that HSBC Holdings (HSBC) is expected to continue its relative performance due to its better profit momentum. It is highlights to positive rating HSBC before the release of half-year results, rather than BOC Hong Kong or Standard Chartered. One-sentence conclusion: Hong Kong banking stocks have defensive value in a weak market, and improving fundamentals (loan growth + asset quality optimization) support stock prices. HSBC Holdings has the strongest profit certainty and is the top choice in the sector. Pros/Cons: Positives: HSBC (positive rating key name discussed), regional banks. Relatively weak: Bank of China Hong Kong (BOCHK), Standard Chartered (STAN). Tip: The market's concerns about the decline of the industry's net interest margin may be excessive, but the positive impact of NPL improvement and loan growth has not yet been fully priced in. Catalyst: Half-year results: The 2026 interim results to be released by various banks are a key node to verify the profitability trend. Federal Reserve Interest Rate Resolution: Signals on the path of future interest rate increases directly affect banks’ net interest margin expectations. New ODI rules: The impact of mainland China’s new outward direct investment rules on Hong Kong’s wealth management business.