JPMorgan: ASEAN Financials — When Facts Change: 7 Rating Changes
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JPMorgan enacted seven rating changes across ASEAN financials to reflect the secondary effects of persistently high energy prices, suggesting this may be the start of a prolonged cycle of EPS estimate adjustments.
The bank downgraded CIMB and BBL to Neutral (from Overweight), OCBC and SCB to Underweight (from Neutral), and KTB to Underweight (from Overweight). Conversely, Tisco was upgraded to Neutral and Bank Central Asia (BCA) to Overweight. Target prices for DBS, SGX, KBANK, and TTB were also adjusted while maintaining their existing ratings.
The Philippines is deemed the most vulnerable to energy shocks, while Thailand faces stagflation risks and Singapore contends with elevated valuations buffered by strong dividends. Malaysia remains JPMorgan's preferred market, benefitting from a favorable energy balance, current account surplus, and sufficient system liquidity.
Indonesia is experiencing liquidity tightness, with SRBI yields rising approximately 60 basis points over the past three months, prompting 100 trillion rupiah in government liquidity injections. Despite domestic liquidity concerns, BCA's valuation at 13.6x PE approached Global Financial Crisis levels, warranting the upgrade. Singapore banks trade near 10-year PE highs, but global credit risks—particularly within the GCC and ASEAN—pose asset quality threats. Thai big-four banks face NIM compression, whereas financial companies with lower funding costs, such as TTB and Tisco, are better positioned.