01988 Overview

FTSE China Index Series Review: FTSE Russell has released the results of the FTSE China Index Series quarterly review for 1Q26, highlighting its significance as a benchmark for the Chinese equity market, with nearly 60% of globally issued ETFs tracking a FTSE China index.

Index Additions and Removals: The FTSE China A50 Index will include new stocks such as CHINA CSSC, TFC, and WANHUA CHEM, while removing EVERBRIGHT BANK, CRRC, and SHANXI FEN WINE.

FTSE China 50 Index Changes: The FTSE China 50 Index will add NCI and WEICHAI POWER, and remove MINSHENG BANK and ZTE, with details on short selling ratios provided for each stock.

Market Data Notes: The article includes a note that Hong Kong stock quotes are delayed by at least 15 minutes, and short selling data is current as of March 4, 2026.

UBS Upgrade: UBS upgraded MINSHENG BANK from Neutral to Buy, citing its deep discount valuation and projected earnings improvement starting in 2026.

Earnings Forecast: The bank's earnings are expected to break even in 2026 and show positive growth from 2027, leading to potential valuation re-rating.

EPS Adjustments: UBS raised its EPS forecasts for MINSHENG BANK for 2026-2029 by 5-6%, while slightly increasing the cost of equity to 11.5% due to market volatility.

Target Price Change: UBS slightly reduced its target price for MINSHENG BANK from $5.43 to $5.30 amidst the adjustments in forecasts.

JPMorgan's Forecast for Chinese Banks: JPMorgan predicts share price gains for Chinese banks but expects them to underperform the market in 2026, despite a projected liquidity boost from maturing time deposits.

Revenue and Profit Growth Expectations: The bank anticipates moderate improvements in revenue and profit growth for Chinese banks in 2026, driven by net interest income recovery and wealth management fees.

Stock Ratings and Recommendations: JPMorgan upgraded MINSHENG BANK's H-shares to Overweight while downgrading ABC's H-shares to Neutral, favoring high-dividend stocks like BANKCOMM and BANK OF CHINA.

Target Prices for Key Banks: The report includes updated target prices for several banks, with BANK OF CHINA and CITIC BANK rated Overweight, reflecting a positive outlook on their performance.

Morgan Stanley's 2026 Outlook: The report provides forecasts for the price-to-book (PB), return on equity (ROE), and dividend yield of various Chinese banks' H-shares for the year 2026.

Bank Performance Metrics: Key banks such as ABC, ICBC, and CCB show varying PB ratios, ROE percentages, and dividend yields, with ICBC having the lowest PB at 0.48x and CM Bank leading in ROE at 12.6%.

Short Selling Data: The report includes short selling statistics for each bank, indicating significant short selling activity, particularly for PSBC and CM Bank, with ratios of 51.978% and 45.638%, respectively.

Market Reactions: The stock prices of the banks reflect mixed performance, with some banks experiencing slight increases while others show declines, highlighting the volatility in the Chinese financial sector.

Morgan Stanley's 2026 Outlook: The report provides a ranking of H-shares for Chinese banks, indicating a preference for several banks with "Overweight" investment ratings.

Top Ranked Banks: The top banks listed include Minsheng Bank, CITIC Bank, Bank of China, CCB, and PSBC, all rated "Overweight" with specific target prices.

Short Selling Data: The report includes short selling statistics for each bank, highlighting the amount and ratio of short selling activity.

Underperforming Banks: Some banks, such as Bank of Communications, CEB Bank, and CQRC Bank, received "Underweight" ratings, indicating a less favorable outlook.

Morgan Stanley's Market Outlook: Morgan Stanley predicts that the Chinese financial market will hit its lowest point in 2025 before entering a positive growth cycle, characterized by a recovery in loans and financial asset yields, stable credit costs, and an active capital market.

Preferred Sectors and Stocks: The insurance sector is highlighted as a top pick, particularly PING AN, while BANK OF NINGBO and MINSHENG BANK are noted for their strong performance and turnaround potential, respectively.