China's Banks rerating Upward.

Morgan Stanley has raised its price targets for Bank of China (BOC), Bank of Communications (BoComm), China Construction Bank (CCB), China Merchants Bank (CMB) and Industrial & Commercial Bank of China (ICBC), saying the lenders will benefit significantly from a tighter liquidity environment and robust equity market in the mainland. It noted that China's major banks have more liquid balance sheets and are therefore more exposed to improving bond yields. Tighter liquidity in the mainland's financial market has enabled major banking institutions to improve current bond yields to an average 2.88 pct against an average of 2.25 pct last year, Morgan Stanley noted. Average current interbank yields are at around 2.39 pct, up from an average 2.05 pct last year. Morgan Stanley said it has raised its target price on BOC to 5.09 hkd from 4.77, BoComm's to 9.57 from 8.67, CCB's to 6.6 hkd from 6.0, CMB's to 26. 84 from 20.29 and ICBC's to 5.20 hkd from 4.73.