Hong Kong banks must brace themselves for growth slowdown

Will blanket strategy be enforced?

According to CCB International Securities, Hong Kong banks have underperformed the index YTD (-6.0% versus -4.3% for the HSI) as tighter liquidity resulting in higher system funding costs begin to take a toll. 

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Given continued investor concerns over liquidity, a potential correction in property prices, China asset quality and continued regulatory measures being enacted, the upside for the group is likely to be capped in the short-term.

As such, investors cannot implement a blanket strategy for the group as 2014 will definitely be a year where bottom-up stock picking will be warranted given the defensive posture of the market.