Wednesday, September 23, 2020
 
Columnist
Martin Hennecke

HSBC sinks to 11-year low
 
17/09/2020
 
HSBC (0005) dropped 0.94 percent to HK$31.75 yesterday, hitting an 11-year low, after a growing number of major investment houses lowered their target price for the British bank. Morgan Stanley estimates that HSBC's income will fall to US$23.3 billion in the second half, down from US$26.2 billion in the first half. During a teleconference, HSBC's management revealed that the bank is sticking to its goal of bringing down long-term costs, expecting a low-interest rate environment would continue to impact the net interest margin, according to Morgan Stanley. Morgan Stanley previously revised its target price down for HSBC to HK$36 from HK$42. Last month Goldman Sachs also trimmed its target price for HSBC to HK$50 from HK$55. The Hong Kong and Shanghai Banking Corp reportedly laid off more than 40 staff despite its parent, HSBC, saying earlier that it would increase the headcount and investment for its local branch. The HSBC workers were laid off from the lender's retail and private banking departments, as well as the IT department of the insurance segment, local media reported. The London-based group restarted its heaviest layoff plan ever in June - aiming to slash about 35,000 staff from its global workforce. The outlook of the global banking industry has been clouded by hefty interest rate cuts amid the coronavirus pandemic. The US Federal Open Market Committee is all but certain to keep its benchmark overnight rate in a target range of 0 percent to 0.25 percent, where it's been since March 15 to help soften the Covid-19 pandemic's blow. During the 2008-09 financial crisis, HSBC launched a 12.5 billion (HK$116.8 billion) rights issue, allowing shareholders to buy five new HSBC ordinary shares for every 12 shares held, at HK$28 per share, sending its share prices tumbling. A few days later, stock commentator Agnes Wu Mang-ching, shed tears during a live television broadcast the moment HSBC closed at HK$33 in March 2009. Yesterday, the benchmark Hang Seng Index dipped 0.03 percent, or 7.13 points, to 24,725.
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