While Standard Chartered largely escaped the ravages of the Western banking crisis, through doing the bulk of its business in Hong Kong and the wider Asian region, that focus has turned around and bitten the banks stock since fears of a similar catastrophe in China have arisen.
Standard Chartered only earns around 10% of its profits in Europe and the Americas, with around 30% in 2013 coming from Hong Kong alone so its no wonder that investors shunned the bank when Chinese lending started to get out of hand and the countrys property market got a bit overheated.
But those fears are surely overblown. In fact, property prices have already cooled, with August bringing the fourth month of falls in a row, and the government is already pumping cash into state-owned banks to maintain liquidity and provide stimulus. One overall effect is that Chinas economic growth is sticking close to the governments target of around 7%.
But when it comes to Standard Chartered, there actually is more.
The bank has been having troubles in its South Korean business, with profitability in the country slumping badly Korea, in some ways, looks a bit like an Asian version of Southern Europe.
Weve also been seeing a few quarters of tough-looking figures, and there doesnt appear to be anything in the way of strategy for turning things around. On top of earnings per share (EPS) falling by more than 15% for the year to December 2013, thats led some to question the suitability of chief executive Peter Sands for the top job.
But forecasts for the full year are steadying with the City expecting a modest recovery in EPS. And since a month ago, dividend forecasts have actually been beefed up a little, with the consensus expecting 51.5p per share this year for a yield of 4.4%. And a majority Buy rating remains in force.
Standard Chartereds dividend yield is a little lower than HSBCs, but its shares are on a lower forward P/E of 10.4, dropping to 9.4 for 2015.
WithStandard Chartered shares down 22% over the past 12 months, do brightening prospects in China mean theyre worth buying? I think theyre good value now but you must do your own research before you make your choice!
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.