After the release of shocking China’s data in early Aug, bank lending fell to the lowest level in nearly five years and the broader measure of credit, total social financing, fell to the lowest in nearly six years. Fixed asset investment, industrial production and retail sales all missed estimates.
Courtesy: chamber.org.hk | Bank of China, HSBC and Standard Chartered Banks headquarters standing in Admiralty, Hong Kong
Source: The Standard Finance
A report from rating agency Standard & Poor’s (S&P) said the demand for corporate debt in the Asia-Pacific region, particularly from China, will exceed that of North America and Europe combined in 2016.
China now has US$14.2 trillion (HK$110.76 trillion) outstanding corporate debt as at the end of last year when total corporate debt of the United States stood at US$13.1 trillion.
It is estimated that by 2018 China debt needs will rise to US$20 trillion, accounting for one-third of global financing.
Meanwhile, borrowing in the euro zone is slowly picking up and a strengthening US economic recovery is bolstering funding needs in North America.
So, if you really want to play safe and accumulate bank shares with dividend yield, HSBC (0005.HK) should not be your first choice.
Probably the best choices are Bank of China Hong Kong (2388.HK) and Bank of East Asia (0023.HK).Both are good candidates as they offer more than a 3percent dividend yield even after the recent stock.
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