Morgan Stanley: Expects HSBC HOLDINGS to outperform Hong Kong banks, may not match state-owned banks, raises target price to HKD 115

JP Morgan published a research report indicating that it has raised HSBC HOLDINGS' forecasts for fees and other income for 2025, 2026, and 2027 by 2%, 4%, and 4%, respectively, and net profit forecasts by 2%, 2%, and 3%. The target price has been raised from HKD 108 to HKD 115, with a rating of "Overweight." The report states that HSBC and Standard Chartered's stock prices have increased by 19% and 25% respectively since the beginning of the year, compared to an approximate 21% rise in the Hang Seng Index during the same period. It notes that investors are increasingly concerned about the impact of U.S. growth risks on interest rate trends, which in turn affects the profitability and valuation of both banks. Sensitivity test results show that under scenarios of significant interest rate cuts, reduced fee income, and rising credit costs, HSBC and Standard Chartered's return on equity after tax could drop to 11.6% and 8.7% in 2025, which is expected to put pressure on stock performance. However, due to a higher overall return rate, Morgan Stanley expects HSBC to outperform Standard Chartered and local Hong Kong bank stocks, but may not perform as well as Chinese state-owned banks