02888 Overview

Market Overview: The HSI opened slightly lower at 25,436, while the HSCEI and HSTECH saw minor gains, indicating mixed market sentiment.

Bank Performance: Major banks like HSBC and Standard Chartered experienced declines, with HSBC down 2.7% and Standard Chartered down 1.3%, amidst significant short selling activity.

Gold and Mining Stocks: Spot gold prices fell below USD 5,000, leading to losses in gold mining stocks such as Lingbao Gold and Zijin Mining, which dropped between 1.8% and 4.6%.

Tech Stock Movements: Tech stocks showed varied performance, with Tencent and Meituan gaining, while Baidu and Bilibili saw slight declines, reflecting a mixed outlook in the technology sector.

International Banks' Actions: Several international banks, including HSBC and Standard Chartered, have paused transactions involving Asian assets for some Middle Eastern clients due to current market conditions.

Shift in Focus: Banks from Japan, Greater China, and Singapore are reassessing their projects and risk exposures, with plans to redirect their focus towards more stable markets like South Korea and Australia.

Bank Evacuations: Citigroup and Standard Chartered have started evacuating their Dubai offices and instructed employees to work from home due to safety concerns.

HSBC Branch Closures: HSBC has closed all its branches in Qatar until further notice to ensure the safety of its employees and customers.

Geopolitical Concerns: The geopolitical uncertainty in the Middle East, particularly threats from Iran against Gulf banking interests linked to the US and Israel, may impact Hong Kong banks.

Short Selling Data: Citigroup and HSBC are experiencing significant short selling, with ratios of 30.375% and 33.073%, respectively, indicating market concerns about their stability.

Market Risk Aversion: JPMorgan's research report indicates that rising military tensions in the Middle East may lead to a significant market risk aversion correction.

STANCHART's Vulnerability: STANCHART is expected to face a larger pullback due to its substantial exposure to the Middle East, with projected contributions from the UAE accounting for 2.5% of loans and 5.6% of revenue by 2025.

HSBC Holdings Performance: HSBC Holdings reported that its loan and revenue contributions from the Middle East are 2.3% and 3.8%, respectively, indicating a stable performance despite regional tensions.

Credit Risk Management: As of 2Q25, 73% of STANCHART's loans in the UAE are linked to government and public institutions, which helps maintain manageable overall credit risk.

JPMorgan's Prediction: JPMorgan forecasts that Standard Chartered (STANCHART) will experience short-term stock price pressure due to its significant exposure in the UAE, which contributed 2.4% of its assets and 5.6% of its revenue last year.

Long-term Outlook: Despite the short-term challenges and rising geopolitical risks, JPMorgan maintains a positive medium to long-term outlook for STANCHART, rating it as Overweight and slightly increasing its target price from HKD265 to HKD270.

CEO Compensation: Standard Chartered CEO Bill Winters' total pay package increased by only 2% to GBP12.7 million in 2025, contrasting with significant raises for CEOs at US banks like Citi and Bank of America, who saw increases of 22% and 17%, respectively.

Short Selling Activity: The short selling activity for Standard Chartered amounted to $1.85 million, with a short selling ratio of 4.077%.