Hsbc Share Discussion Threads

[2ngh] 12/1/2007 12:28

Why the sudden fall?

[financeguru] 11/1/2007 16:39

well well, what a day!....... more confused than ever.

[miata] 11/1/2007 12:21

Note the exchange rate effect (graph above) of the move to 5.25% on your investment which is effectively dollar-based.

In addition, banks are forced to hold large amounts of fixed interest securities to maintain liquidity margins and the capital value of these securities fall when interest rates rise, meaning the bank will incur a capital loss. For example, Treasury 5% 2014 was trading at 100.45/100.60 before the move and is now at 100/100.15.

[2ngh] 11/1/2007 12:13

BOE raise rates a quarter point, possible further rate rises to come.

[miata] 11/1/2007 11:07

Merill downgrade HSBC to sell.

[miata] 10/1/2007 13:19

Credit Suisse kept its price target on HSBC unchanged at 1,020p.

I am watching exchange rates - which as I have previously mentioned are material to HSBC's sterling shareprice - they should move tomorrow if the BofE or ECB move.

[financeguru] 10/1/2007 13:13

testing the low again....if we can hold at the 920....I think we can go forward and test the 1000 level again. Of course that is a very big IF!!!!!!!

[arja] 09/1/2007 12:14

yes, it has become the "dog" of the banking sector and seems to fall whether market up or down in last week or so . most other bank stocks well up today ! i got out at a loss a few days ago so maybe a buy signal - usually works out like that !! good luck to those hanging on for better times.

[mikepearce45] 09/1/2007 01:25

So, " HSBC reveals -double act- at the helm"

It will not work,Green is too weak and Geoghegan is far too abrasive they will spend too much time in fighting

And just how is that going to sort out the shambles that is coming to the surface in the US?

For those of us who are "greying at the temples", substitute Household Int 2003 for Crocker National 1981 and what do you get? Oh boy!

edit. miata it may be time to change the header.

[financeguru] 08/1/2007 16:21

now where do we go???????????????

[mikepearce45] 07/1/2007 19:23

Not pleasant reading

[miata] 05/1/2007 09:40

Telegraph.

[gateside] 05/1/2007 09:11

MIATA... Thanks for the excellent article. Where was it from?

[miata] 05/1/2007 09:04

HSBC's share price over the past five years is the second worst in the British banking sector, with only Lloyds TSB behind it, while over the past year, based on total returns statistics from Bloomberg, it has produced a return of just 7.11pc against a sector average of 17.16pc.

Ironically, it is HSBC's desire to go local that has precipitated much of its latest problems, not least its £9bn acquisition of the American sub-prime lender Household International in March 2003.

At the time of the acquisition, the corporation's then chairman, Sir John Bond, who masterminded the deal, tried to allay fears that HSBC was changing from what had been a conservative, distinguished bank to a company lending to inhabitants of trailer parks.

Even before the deal was completed, a number of class action lawsuits emerged against Household, which was fined $500m (£257m) in 2002 for predatory lending. But the bad publicity surrounding the since renamed HSBC Finance Corporation (HFC) has been the least of HSBC's worries when compared to the quality of its lending book.

Sir John, at the time of the acquisition, reassured investors by saying HSBC would take HFC's North American lending upmarket. But recent trading statements have shown its North America consumer lending book is a problem for the bank that appears to be growing larger by the day.

Ian Smillie, an ABN Amro banking analyst, goes so far as to label the marriage of HSBC and HFC a "fatal attraction", arguing that rising bad debts from the US business will not be offset by revenues. At the nub of his argument, which earlier this week caused him to reduce HSBC's rating from a hold to a sell, is that the upcoming bad debts it will face in the US have not been factored into the company's earnings forecasts or its valuation.

He calculates that HFC could easily charge $8.7bn of bad debts for the financial year to December 2007, up from $5.7bn for the current year, and equivalent to 35pc of Smillie's profit forecast for 2007.

Others also see problems. UBS's Alistair Ryan says: "We expect [HFC] will experience impairments on its mortgage services portfolio of $1bn greater than it expected even without a further significant deterioration in the US economy or housing market overall." Sanford Bernstein's Antony Broadbent says: "Our concern is that in 2007 and 2008, the increase in charge-offs will spread from the secured book to the unsecured book, which constitutes around two thirds of HFC's losses."

Broadbent points out that US personal financial services, the bulk of which come from HFC, accounted for 65pc of the group's impairment charge in 2005.

The move towards an increased number of unsecured losses is particularly worrying, especially as secured mortgage loans written as recently as 2006 are now defaulting.

All this, of course, is linked to the cyclical downturn in the US housing market, and is not purely a problem of HFC's making. But at the time of the acquisition, Sir John heralded the "smarts" – or number-crunching boffins – at Household who were supposed to be able to predict bad debts.

In addition, the rationale was to spread risk by diversifying from HSBC's former Asian focus. Given that US and Asian markets tend to follow much the same pattern (because the US is the biggest investor in many of these markets and typically the biggest trade partner) it is arguable as to whether the HFC acquisition ever offered any real form of diversification.

But North America is not the only business area over which questions are being asked. In investment banking, which generates 25pc of group profits, there are real concerns that the reshaping of the corporate bank is not taking place quickly enough.

After the departure of John Studzinski last summer, Stuart Gulliver was given a clear mandate to get the investment bank back on its feet. Gulliver, according to one person close to him, is only too aware that HSBC will never be a bulge-bracket bank, as Studzinski once privately hoped. Instead his job is to get it focused, and performing: not an easy task when it has been backfiring for some time, and is sure to be hit by further staff changes as Gulliver moulds his own team, and some from the Studzinski era decide to depart.

This year is likely to be one of reorganisation at the investment bank, so the benefits are may not be seen before 2008. Even in Asia, HSBC's traditional home, the bank is arguably losing out to old rival Standard Chartered as well as new ones such as Royal Bank of Scotland, whose fledgling tie-up with the Bank of China looks increasingly shrewd. Naturally RBS will have to go a long way before it can even be considered a minor competitor to HSBC on its home turf but it appears to be making strides in the right direction.

Direction in any business comes from the top and a number of City sources have questioned the strength of HSBC's leadership. Even before Michael Taylor, Threadneedle Investment's retiring equities head, claimed that HSBC's new chairman, Stephen Green, appeared to be "asleep on the job", question were being asked. Green was no newcomer when he took over from Sir John last summer. He joined the bank in 1982 and went on to become head of investment banking and then chief executive in 2003. But nevertheless his style is very different from the statesman-like Sir John, or even that of the new chief executive, Mike Geoghegan, who is something of a bruiser.

It is believed that Green is now turning his role as chairman into one more akin to that of non-executive chairman. The perception in the City is that reporting lines have changed and that Geoghegan is in charge of more areas than Green used to be when he held the same job.

The changes to HSBC's non-executive team are also telling, being seen by many as a way of shoring up a rather weakened board. The placing of Simon Robertson, the former chief of Goldman Sachs Europe, as HSBC's new senior independent non-executive director certainly appears to have gone down well with the bank's shareholders. Robertson, who is also chairman of Rolls-Royce, is seen as a strong future counterbalance to HSBC's two deputy chairman, Sir Brian Moffatt and Baroness Dunn, neither of whom is viewed as independent, because of their length of service.

Perhaps even more interesting was the appointment of City grandee Sir Brian Williamson as chair of the nominations committee. The HSBC board has long operated on the principle that it "grows it own timber", and placing Sir Brian in charge of new board appointments puts a relative outsider in a key position, one which might lead to HSBC's first external chairman when the time comes for Green to stand down.

Whatever the shape of the future board, it is clear that HSBC is at a crossroads. If it continues on with its existing strategy, and does not listen to calls from its shareholders or the wider market, there is undoubtedly likely to be more trouble ahead. But if it pauses for thought, and reconsiders that strategy, then it may yet return to greatness, and proudly embody its favoured monicker, of the world's local bank.

[miata] 04/1/2007 12:24

ABN Amro has downgraded HSBC to "sell" from "hold" citing valuation grounds.
It argues that bad debts are likely to continue rising in 2007, which will negatively impact on HSBC.

[chrissingh] 02/1/2007 12:44

This is on a Northerly direction with the changes in China's financial policy as reflected in Hang seng closing 345 points higher on the first trading day oe 2007. HSBC is already reaping from the ripple effect so get in now if you want to benefit from this upward trend. Soon it will see 1000 mark.

[miata] 02/1/2007 08:53

The Hang Seng Index closed up 345 points (1.7%) at a new closing high of 20,310, helped by China's changes to rules which increase access for Chinese individuals and banks to foreign exchange and Hong Kong Nov retail sales value up 7.4%.

Note that the HK New Year effect, as set out in post 265, can be a very short term one.

[holgerl] 01/1/2007 11:15

Theres gonna be a terror alert and will shaft this price soon i feel

[diku] 26/12/2006 18:59

It gooooooooooooooooooes up...up...up...up.....

[diku] 26/12/2006 15:30

Even HSBC gets on the Sale bandwagon...that is the Green Sale...what ever next...how about take out one mortgage...get the other mortgage FREE!!!

[miata] 22/12/2006 16:36

In Hong Kong the New Year celebrations have often put investors in a short term positive mood:

31/12/01 806 4/1/02 839
31/12/02 686 6/1/03 708
31/12/03 878 7/1/04 892
31/12/04 879 5/1/05 890
30/12/05 933 9/1/06 969

[mustyair] 22/12/2006 09:22

Getting the neddle from Threadneedle, and others by the look of the share price A dip trip below previous low a distinct possibiliy IMHO.

[penycae] 21/12/2006 08:36

Constrained ain't the word.

[miata] 20/12/2006 10:16

The HSI ended up 276 points (1.5%) at 19,240, following the Thai decision to exempt equities from capital controls and record prices achieved in a Hong Kong government land auction Tuesday - $5,427 per square foot, more than double the previous record for a Hong Kong property.

With the dollar remaining weak ($1.97/£ = £0.5076 per $) upside remains constrained.