2 Hong Kong travel agencies, guide stripped of licences over ‘coerced shopping’

Morgan Stanley's recent report highlights that Singapore and Hong Kong's banks will be significant beneficiaries as Asia's capital markets deepen in the second half of this year. As household wealth rises through increasing incomes, urbanization, and an expanding middle class, savings are shifting from deposits and property to financial assets such as equities, bonds, mutual funds, and alternative investments.

This process, known as "financialization," is causing markets and institutions to increasingly influence how businesses operate and people live. Consequently, financial systems are evolving from being primarily bank lending-driven to more market-based.

Singapore and Hong Kong are poised to remain key regional financial hubs due to their strong regulatory frameworks, deep institutional investor bases, and the ability to facilitate capital flows across Asia. Both markets are benefiting from robust infrastructure, including the presence of leading banks with integrated corporate, transaction banking, wealth management, and capital markets platforms.

These banks stand to gain from the growing demand for wealth management, private banking, and cross-border capital flows as regional economies mature.

DBS, OCBC, and UOB in Singapore have been expanding their capabilities across Southeast Asia, while HSBC and Standard Chartered in Hong Kong facilitate international capital flows, trade finance, and wealth management in multiple regions. Bank of China (Hong Kong) also stands to benefit from the increasing internationalization of the RMB and China-related capital market activity.

However, domestic Southeast Asian banks are still heavily reliant on traditional lending and are less exposed to structural growth opportunities. As a result, they may present attractive valuations but require caution due to unfavorable macro conditions and overhangs from domestic policies. In Thailand, banks are seeking to expand their loan books after a few years of de-risking, with most lending expected to be secured retail and corporate lending.

This suggests a transition from a period of balance sheet stagnation to one characterized by renewed credit expansion.

The analysts also highlight Bangkok Bank and Kasikornbank as well-positioned among Thai banks, given their focus on corporate banking and regional connectivity. Other select Malaysian banks like CIMB and Maybank could also benefit from the deepening of Asia's capital markets. Conversely, Indonesian and Philippine banks have faced more earnings downgrades due to softer growth expectations and weaker lending momentum.

The analysts emphasize that capital market growth will become a crucial differentiator for banks over the next decade, as balance sheet growth becomes a key earnings driver. As policy rates decline and margin tailwinds fade, loan growth will become increasingly important for profitability. Many corporations are now entering a new investment cycle, expanding capacity, and increasing infrastructure spending, which will drive demand for various banking services, including corporate loans, working capital facilities, trade finance, and transaction banking.

This creates a powerful multiplier effect, as a single corporate relationship can generate multiple revenue streams for banks through project financing, supply chain financing, trade services, and foreign exchange solutions.