JPMorgan_Econ_FI-EM_Asia_Financials_2025_Outlook_Presentation-112644413_16页_768kb
报告摘要
EM Asia Financials 2025 Outlook Summary
Core Content Overview
This document provides a comprehensive outlook on the financial sector in Emerging Market (EM) Asia for the year 2025, highlighting key themes, trade recommendations, and market fundamentals. It is authored by J.P. Morgan Securities (Asia Pacific) Limited, with contributions from credit research analysts Shirley Yau and Matthew Hughart.
Key Themes for 2025
- Growth Outlook: EM Asia financials are expected to see a decline in growth from 4.8% in 2024 to 3.9% in 2025, which may weigh on fundamentals. However, some sub-sectors might experience less negative or even positive impacts.
- Credit Spreads: JACI Financials' spreads are currently around 20bp off the multi-year tightest levels, with a relatively narrow spread of 14bp compared to DM financials, which historically had a spread of 50-60bp.
- Issuance Forecast: J.P. Morgan forecasts US$83 billion in financials issuance for 2025, a slight increase from the US$78 billion issued so far in 2024. China and South Korea are expected to dominate the issuance, accounting for 77% of the total.
Trade Recommendations
- Hong Kong Life Insurance: Strong solvency and profitability support credit profiles. Insurance is preferred over banks in Hong Kong.
- Tier 2 Bonds: These are relatively undervalued in Singapore and South Korea, offering relative value within capital structures.
- India AT1: Offers attractive yields and short times to call, with strong fundamentals and low risk of non-calls.
Market Performance Summary (As of December 31, 2024)
| Issuer | Market Cap (US$bn) | YTD Return 2024 (%) | YTD Return 2023 (%) | Z-spread to Worst (bp) | Z-spread to Worst 2024 Change (bp) | Z-spread to Worst End of 2023 (bp) | YTW (%) | Dur. to Worst |
|---|---|---|---|---|---|---|---|---|
| JACI | 904 | 5.7 | 7.0 | 188 | -82 | 270 | 5.9 | 4.4 |
| JACI financial | 252 | 6.5 | 7.1 | 136 | -79 | 216 | 5.4 | 2.8 |
| JULI (ex-EM) financials | 2,329 | 4.4 | 8.1 | 120 | -32 | 152 | 5.5 | 5.2 |
| CATIE (US$) Asia | 36 | 8.8 | 8.1 | 186 | -79 | 265 | 6.0 | 1.8 |
| CATIE (US$) Europe | 110 | 11.2 | -1.4 | 306 | -94 | 400 | 7.1 | 3.1 |
| China Financial | 104 | 6.2 | 6.6 | 110 | -54 | 163 | 5.2 | 2.0 |
| Korea Financial | 30 | 5.9 | 7.7 | 105 | -68 | 173 | 5.1 | 2.5 |
| India Financial | 20 | 5.7 | 8.4 | 150 | -19 | 169 | 5.5 | 3.1 |
| Singapore Financial | 14 | 5.5 | 6.5 | 96 | -57 | 153 | 5.0 | 2.5 |
| Hong Kong Financial | 64 | 7.7 | 8.6 | 164 | -123 | 287 | 5.7 | 4.1 |
| Thailand Financial | 11 | 6.4 | 8.7 | 148 | -85 | 233 | 5.5 | 3.4 |
Relative Value Analysis
- Financials Trade Around 50bp Inside the Index: Financials are trading relatively close to the index, indicating some undervaluation.
- Financials Trade in Line with IG Corporates: The sector's performance aligns with investment-grade (IG) corporate bonds.
- Asia Financials Tighten Relative to US Financials: Asia financials are currently tighter compared to US financials, suggesting a favorable position in the market.
Fundamentals Outlook
- Banks: Fundamentals are under pressure in most EM Asia markets, with China and Hong Kong banks facing challenges.
- Insurance: Hong Kong insurance shows a stable outlook, with fundamentals remaining relatively neutral.
- India NBFs: The outlook is mixed, with potential for both upward and downward movements.
- Singapore: Shows a positive fundamental outlook.
- Korea Banks: Maintain strong balance sheet buffers, indicating resilience.
Additional Tier 1 (AT1) Bonds
- Asia AT1 is an increasingly short-call space: AT1 bonds in Asia are becoming more attractive due to shorter call periods.
- Basis Between Europe and Asia AT1 Decreased: The spread between European and Asian AT1 bonds has narrowed in 2024.
- Asia AT1 Trades Tighter Than EM Peers: Asia AT1 bonds are trading at the tighter end of EM peers, indicating a strong relative value.
Credit Research Methodology
- J.P. Morgan uses a bond-level rating system that incorporates relative value and fundamental credit views.
- Ratings are categorized as Overweight (buy), Neutral (hold), and Underweight (sell).
- For CDS, the rating system includes Long Risk, Neutral, and Short Risk.
Legal and Regulatory Disclosures
- The report includes detailed legal and regulatory disclosures for various jurisdictions, including compliance and licensing information.
- It highlights that the Research Analysts are not associated with the investment banking divisions and are independent in their research.
- The report also notes the regulatory framework in different regions and the importance of compliance with local laws.
Conclusion
The financial sector in EM Asia is expected to face a modest growth decline in 2025, with some sub-sectors showing resilience. J.P. Morgan recommends focusing on life insurance in Hong Kong, Tier 2 bonds in Singapore and South Korea, and India AT1 bonds due to their attractive relative value and fundamentals. The report provides a detailed analysis of the sector's performance, relative value, and credit outlook, supported by comprehensive legal and regulatory disclosures.
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