Jpmorgan's research report indicates that the stock prices of HSBC (00005.HK) and Standard Chartered (02888.HK) have each underperformed the Hang Seng Index by 1.6% and 2.5% respectively, partly reflecting their weak performance on the London Stock Exchange. The bank believes that the stock prices have fallen too much, especially for Standard Chartered. It is noted that the total loans for commercial buildings in Hong Kong for HSBC and Standard Chartered account for only 1% and 4%, respectively. The loan-to-value ratio of Standard Chartered's commercial building loans is only at the level of 37%, without any impairment loans. Even in a risk scenario where the impairment rate is 10%, the impact on profitability is only in single digits.

The bank also pointed out that the interest rate cut by the Bank of England was in line with expectations, and both banks delivered good second-quarter results, which is expected to lead to an upward revision of earnings per share forecasts in the market. It is worth noting that the total returns for HSBC and Standard Chartered are 9.4% and 9.8%, respectively, which supports their stock price performance, especially in a weak market sentiment. The bank prefers Standard Chartered over HSBC. (vc/cy)

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