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Financial Services Roundup: Market Talk

21 Mar 2018 8:20 am

The latest Market Talks covering Financial Services. Exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

0819 GMT - While continuing to believe proposed listing-rule changes will make Hong Kong a more active market, helping Hong Kong Exchanges, it drops the firm from its conviction-buy list and cuts its stock target 11% to HK$310 following slowed trading this month and Chinese policymakers' efforts to have national champions list on the mainland. The bank's move adds to recent pain for shares, which have now fallen 5.2% this month with today's 1.8% drop. HKEx's 2018 gain is now 12% amid the current 4-day losing streak, the first since early February. (john.wu@wsj.com)

0759 GMT - Assicurazioni Generali's operating profit should decline in the next two years, Bernstein says, as it revises downward its EPS estimates for the Italian insurance giant. The brokerage expects the company's 2019 operating profit to drop by more than 6% compared with the results reported in 2017. Bernstein, which has an underperform rating on the company, sees two earnings headwinds for Generali: falling life-investment margins and non-life margins that will come under pressure. "We reduce our EPS forecasts for 18-21 by 1% on average," it says. (pietro.lombardi@dowjones.com; @pietrolombard10)

0756 GMT - Central Depository Services is a hidden gem in financials thanks to the duopoly's strong growth prospects, says HDFC Securities in starting coverage at buy. The stock has moved back toward mid-2017's IPO price in sliding 20% this year, including 10% this month. But the broker sets a INR425 target, saying that given the risks of data pilferage there's limited opportunity for another depository to be created. CDS has been gaining market share from rival NSDL amid its flexible tariff structure, low-cost offerings and retail focus. HDFC sees CDS' revenue rise 22% annually and operating profit by 29% the next 2 years. Shares are up 1.2% today at INR286.75. (debiprasad.nayak@wsj.com)

0753 GMT - Taking a step forward towards implementing one of the world's largest government-funded health-care programs, India's cabinet is expected to give a formal approval to the spending plan later Wednesday, an official tells WSJ. The government plans to spend around INR105 billion ($1.6 billion) the next 2 years on the effort, shouldering as much as $8,000/year in medical expenses for about 500 million people. The program is seen as opening up new business opportunities for insurers, which have been looking to expand their footprints in India. (rajesh.roy@wsj.com)

0714 GMT - Chinese stocks gave up morning gains in an afternoon slide which was partially reversed by teh close. The Shanghai Composite finished down 0.3% while the Shenzhen Comp slid 1.7% and the startup-heavy ChiNext retreated 1.9%. Insurers were a soft point, with New China Life logged a 9-month closing low with a 4.6% drop. While saying the mainland market's uptrend is still structurally intact, Shenwan Hongyuan Securities expects volatility to persist through April amid earnings season. (john.wu@wsj.com)

0634 GMT - On top of its 2017 earnings miss, Nomura also sees China Huarong Asset Management's outlook turning weaker as provisions and funding costs continue to gain momentum. The investment bank cuts its rating to reduce and its stock target 9% to HK$3.13. Shares are down 3.6% today at HK$3.50. (john.wu@wsj.com)

0315 GMT - New China Life Insurance's 2017 earnings came in as much as 25% below estimates, says Goldman Sachs, due to a larger reserve charge related to bond yields and weaker growth in the company's value of new business. But the investment bank reckons that the charge will be reversed through 2019 amid rising yields, and it thinks VoNB will pick up after last year's regulatory-related impact. Share are down 6.2%, hitting 8-month lows. (john.wu@wsj.com)

0212 GMT - AmBank starts coverage of Malaysia's No.3 Islamic bank by assets at buy and a MYR4.80 fair-value estimate as it thinks BIMB benefiting smartly from rising interest rates. That as the Islamic bank's high floating-rate loans make up 89% of its financing. Shares have fallen 7.7% this year to MYR4.06; they haven't traded yet today. (yantoultra.ngui@wsj.com; @yantoultra)

0150 GMT - ZhongAn Online's bigger-than-expected 2017 net loss sends shares to 6-week lows and Daiwa downgrading the stock to underperform. It also drops its stock target 14% to HK60 while cutting profit forecasts on the online insurer by 18-20% through 2019, largely due to higher claims. Shares, which were a hit when the company went public in September amid the firm's investors including Alibaba's Jack Ma and Tencent's Pony Ma, are now down 34% from October's peak with 6% slide to HK$64.40. (joanne.chiu@wsj.com; @joannechiuhk)

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0052 GMT - Outcomes from the National People's Congress, including merging regulatory functions in China and appointments of pro-reform personnel, should reduce systemic financial risks, says Deutsche Bank. While who will lead the bulked-up regulator remains up in the air, the bank anticipates further hikes in market interest rates plus regulatory moves including the ongoing crackdown on shadow banking and tighter rules on lenders' asset quality. (john.wu@wsj.com)

2251 GMT [Dow Jones] The big news in Fonterra Cooperative's 1H result wasn't the China JV writedown or uplift in its farmgate milk price forecast to NZ$6.55 per kilo of milk solids. Instead, it was the CEO succession plan with Theo Spierings due to step down later in 2018 after 7 years in the role. Fonterra, the world's biggest dairy exporter, had planned to tell investors in April but said it brought forward the announcement to Wednesday to avoid speculation. It's now shortlisting CEO candidates, having started looking internationally in November. (david.winning@wsj.com; @dwinningWSJ)

1813 GMT - Canada's banks may be forced to cut back on cross-selling a profitable creditor insurance product, says National Bank analyst Gabriel Dechaine. The Financial Consumer Agency of Canada cites the insurance, sold with products like mortgages and credit cards, in a report that warns Canada's banks may be selling products to consumers they don't need. Dechaine says the product is one of the most profitable products sold by the banks. Creditors insurance helped Royal Bank of Canada generate a return on equity of more than 40% from its insurance business, he says. (vipal.monga@wsj.com; @vipalmonga)

(END) Dow Jones Newswires

March 21, 2018 04:20 ET (08:20 GMT)

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