Hong Kong Banks to Face Liquidity ‘Squeeze,’ Barclays Says

Hong Kong banks are “about to” face a “significant liquidity squeeze” which means credit is currently “mispriced,” Barclays Capital said.

“Well before U.S. interest rates move we foresee rising funding costs and loan repricing resulting in a contraction in mortgage credit in 2012-2013,” Sharnie Wong and Tom Quarmby, analysts at Barclays Capital, said in a report dated yesterday.

They cut their earnings forecasts for Hong Kong banks by 9 percent to 11 percent for 2012 and 2013, and lowered their ratings for Hang Seng Bank Ltd. (11), BOC Hong Kong Holdings Ltd. (2388) and Wing Hang Bank Ltd. (302)

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