HSBA.L - HSBC Holdings plc
| Previous Close | 561.70 |
| Open | 567.30 |
| Bid | 568.80 x 0 |
| Ask | 568.90 x 0 |
| Day's Range | 566.40 - 570.50 |
| 52 Week Range | 0.78 - 687.70 |
| Volume | 5339361 |
| Avg. Volume | 28,358,882 |
| Market Cap | 116B |
| Beta (3Y Monthly) | 0.56 |
| PE Ratio (TTM) | 8.83 |
| EPS (TTM) | 64.40 |
| Earnings Date | Feb 17, 2020 |
| Forward Dividend & Yield | 0.31 (5.55%) |
| Ex-Dividend Date | 2019-10-10 |
| 1y Target Est | 9.20 |
- Bloomberg
Pound's World-Topping Rally Wobbles as Market Braces for Swings
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.The pound swung between gains and losses as British voters headed to the polls to decide between Conservatives hoping to deliver Brexit in January and a Labour Party promising a second referendum.Bets on overnight volatility in sterling surged to the highest in nearly three years and traders hedged the risk of a surprise outcome in options markets. The currency has been the world’s best performer in recent months, on speculation a majority for Prime Minister Boris Johnson would allow him to get his Brexit deal through Parliament. The rally has held even as polls conducted ahead of voting suggested the race was narrowing.“Our base case is for the Tory Party to secure a comfortable, at least a 20-seat majority and the outcome should be sufficient to keep the pound supported over the long run,” wrote Credit Agricole SA strategists including Valentin Marinov in a research note. “If the Conservatives win fewer seats, there is a risk of a ‘sell-the-fact reaction’ that could see the pound a bit weaker in the immediate aftermath.”The pound traded down 0.2% at $1.3172 by 1:20 p.m. in London, after climbing earlier to touch $1.3229, the highest since March 27. Sterling has gained nearly 7% against the dollar in the past three months. It slipped to 84.48 pence per euro, having reached the strongest level against the common currency since 2017 this week.The pound has been the market barometer of political risk since the June 2016 Brexit vote. After touching an almost three-year low in early September, it has recovered on expectations that Johnson’s gamble to call an election could result in a majority that would allow him move on to trade talks with the European Union.Polls in the U.K. will stay open until 10 p.m., with the first indication of voting due after that in an exit poll. The first results are set to begin filtering through between 11 p.m. and midnight.Pulling All-NighterTraders are preparing for a long day. Some of HSBC Holding Plc’s currency sales and trading team in London will work overnight, while Barclays Plc plans additional staffing in New York, London and Singapore, according to spokespeople at the banks.Investors have turned to the options market to hedge their positions. Bets that the pound will fall in the next week have surged to the highest level since the aftermath of the 2016 Brexit referendum.“There is plenty of scope for a surprise,” said Jeremy Stretch, head of Group-of-10 currency strategy at Canadian Imperial Bank of Commerce, citing the unknowns of the turnout, tactical voting and poor weather in the U.K.’s first December election since 1923. Stretch will be heading home at lunch time before returning to the office to work through the night.Mark Dowding, a portfolio manager at BlueBay Asset Management in London, will be having a Christmas party with his team Thursday night. He expects them all to be huddled around a television when the exit poll is released at 10 p.m., the so-called “witching hour” for currency markets between the end of New York’s day and the start of Asian trading.“We will be waiting until morning before deciding on any trades,” he said. “We are skeptical there will be sufficient liquidity to trade much on overnight news.”(Updates throughout.)To contact the reporter on this story: Charlotte Ryan in London at cryan147@bloomberg.netTo contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, Neil Chatterjee, William ShawFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
HSBC CEO Search Ending Where It Began: Signs Point to Quinn
(Bloomberg) -- Stuck in an elevator, Noel Quinn witnessed first hand the routine travails of then-HSBC Holdings Plc Chief Executive Officer John Flint: his boss was clutching a white belt and an ice bucket, equipment he’d needed to chair a management meeting while in excruciating back pain.It was a “surreal” encounter, Quinn recalled in an internal video chronicling the life of the head honcho at a global institution with almost quarter-million employees and assets approaching $3 trillion.Not long after came another surreal moment involving Flint. Quinn was summoned back to headquarters while en route to Heathrow airport by Chairman Mark Tucker. He was asked whether he would fill in for Flint, who would be ousted days later after less than two years as CEO, and did he want the job full-time. He answered yes to both.Quinn’s rise from obscurity to the glare of a position that paid Flint more than $5 million last year is on track. In internal and external communications, references to the former global head of commercial banking’s role being “interim” have quietly disappeared.Having said he didn’t see himself as a mere “caretaker” after taking the job in August, he’s now laying out a long-term strategy. He’s putting a stamp on the business that the 15-person board wouldn’t have greenlighted for a short-timer, say former HSBC managers, who asked not to be identified.In a sweeping overhaul of the executive ranks this week, the 57-year-old Quinn replaced the top investment banker, chief operating officer and chief risk officer.“My mandate is to run the business not just as an interim CEO, but as the CEO of the bank,” Quinn told employees shortly after he was named.Meantime, executives are planning to unveil a restructuring early next year that’s expected to close parts of the business, scale back stock trading and divest operations including the French retail unit. A fresh strategy is likely to see HSBC focusing even more resources on Asia -- which already provides 90% of profit.The urgency reflects the headwinds threatening the HSBC franchise. S&P Global Ratings put its A rating on negative watch last month after quarterly profits missed estimates. Not all the troubles are of its own making: geopolitical challenges from Brexit to unrest in Hong Kong and the U.S.-China trade war have conspired against its bottom line, adding to pressures from negative interest rates in Europe and slowing global economic growth.HSBC shares have dropped more than 10% in both Hong Kong and London this year, lagging rivals and the benchmark indexes. Flint paid the price, angering Tucker by not moving fast enough.Now it’s up to Quinn: Senior executives who have worked with him say the British banker is a safe pair of hands and aren’t surprised he is the front-runner to lead the business through its third major restructuring in less than a decade.Quinn’s rise could have stalled the ambitions of HSBC’s Chief Financial Officer Ewen Stevenson who insiders had tipped as a potential CEO himself. Stevenson has been a driving force behind the cost-cutting program at the bank, leading some staff to dub him the firm’s “internal activist,” in a reference to the impact of an outside investor agitating for change.Unlike several of his predecessors, Quinn isn’t a product of HSBC’s elite international manager cadre that traditionally produces its leaders, including Flint. He attended Birmingham Polytechnic in central England before training as an accountant. His first job was digging holes on a building site and his banking career began at Forward Trust, a financing and leasing unit of Midland Bank, the U.K. lender that HSBC bought in 1992. He spent the next two decades working his way up the commercial-banking business, spending much of his time in Asia, before emerging at the top of the unit in late 2015.Behind the scenes, Quinn has taken steps to boost his chances of getting the job. HSBC hired Brunswick Group Ltd., the blue-chip public relations outfit, in February, with Susan Gilchrist, the firm’s former CEO and chairwoman of its Global Clients practice, advising on the switch from Flint to Quinn. “We work with a broad range of the management team,” said Gilchrist.“It’s now very hard for someone else to come in and take the strategy and execute it,” said John Cronin, U.K. financials analyst at Goodbody, the Dublin-based broker. “He has really stepped up and taken the job on, so the bet has to be on Quinn.”(Adds 12th paragraph about Stevenson.)To contact the reporter on this story: Harry Wilson in London at hwilson57@bloomberg.netTo contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, James Hertling, Marion DakersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- South China Morning Post
HSBC Swiss private bank to pay US$192 million to settle US tax evasion case
HSBC's Swiss private bank agreed to pay US$192.4 million in penalties and forfeiture to end a long-running inquiry in which it admitted to conspiring with US taxpayers to help them avoid paying taxes on as much as US$1.26 billion in undeclared assets, the US Department of Justice said on Wednesday.HSBC Private Bank (Suisse) agreed to cooperate fully with the Justice Department and the Internal Revenue Service in the investigation and will enter into a deferred prosecution agreement in which it will avoid criminal charges if the Swiss unit shows "good conduct" for a period of three years.The agreement is the latest in an inquiry that has stretched for more than a decade by US authorities and other countries into undeclared assets held by wealthy individuals and families in bank accounts in Switzerland.The investigations have forced open the once secret world of Swiss banking after UBS agreed to pay US$780 million in 2009 and disclose names of wealthy American account holders as part of the US inquiry. It also has caused a number of Swiss institutions to stop servicing American clients. HSBC misses profit estimates as retail bank, markets hurt results"HSBC Switzerland conspired with US account holders to conceal assets abroad and evade taxes that every American must pay," said Stuart M. Goldberg, acting deputy assistant attorney general in the Justice Department's tax division.It is also the latest settlement by HSBC Private Bank (Suisse) over undeclared assets. The Swiss private bank agreed to pay 300 million euros (US$332.7 million) in 2017 to end an inquiry by French authorities into tax evasion by French citizens and agreed in August to pay 294 million euros (US$326 million) to settle a criminal inquiry by Belgian authorities over similar conduct."We are pleased to resolve this legacy matter. Over the past decade we have strengthened our compliance function, enhanced our control framework and put in place a comprehensive client tax transparency policy," Alex Classen, chief executive of HSBC Private Bank (Suisse), said in a statement. "Today the Swiss subsidiary operates under new management and is focused on a smaller set of markets and clients."As part of the agreement, HSBC's Swiss private bank will pay US$60.6 million in restitution, US$71.9 million in forfeiture and US$59.9 million in penalties. HSBC raises digital banking game as it shuns virtual bank licenceThe Justice Department said the penalty takes into account the fact HSBC self-reported the conduct, provided client identifying information to tax authorities, extensively cooperated and implemented remedial measures to protect against future use of its services to evade taxes.The settlement comes as HSBC interim CEO Noel Quinn looks to put his stamp on the bank as he hopes to keep the top job permanently. Quinn is expected to unveil his strategic plan for the bank before it reports its annual results in February, but has already accelerated plans to cut costs at the lender and shaken up its top management.HSBC Private Bank (Suisse) admitted to conspiring with its employees, US clients and others to assist US taxpayers in evading taxes and filing false tax returns between 2000 and 2010, the Justice Department said. At their peak in 2007, the undeclared accounts held US$1.26 billion in assets.To conceal assets from US authorities, the Swiss private bank used a variety of methods, including code names, numbered accounts and accounts in names of nominee entities in the British Virgin Islands, Liechtenstein and Panama to conceal the true ownership of the accounts, the Justice Department said.Bankers also travelled to the US to recruit and meet clients, including a trip by one banker to Design Miami, an art event in Florida, to seek new clients, the Justice Department said.In 2008, after the US began a criminal investigation into UBS, HSBC Private Bank (Suisse) began restricting cross-border business with US clients, but did not immediately cease that business. In some cases, bankers assisted clients in closing their accounts in a manner that allowed them to continue to conceal their offshore assets, the Justice Department said.This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
- Bloomberg
HSBC Agrees to Pay $192 Million to Resolve U.S. Tax Probe
(Bloomberg) -- HSBC Holdings Plc admitted that it helped hundreds of American clients hide more than $1 billion in assets from the Internal Revenue Service and agreed to pay $192.4 million to resolve a decade-long U.S. tax investigation.Prosecutors filed a charge of conspiracy to defraud the U.S. against a unit of the bank, HSBC Private Bank (Suisse) SA, but agreed to drop it in three years if it abides by a deal submitted Tuesday in federal court in Fort Lauderdale, Florida.From at least 2000 through 2010, HSBC Switzerland “assisted U.S. persons in concealing their offshore assets and income from U.S. tax authorities, evading their U.S. tax obligations and filing false federal tax returns with the IRS,” according to the conspiracy charge.The settlement follows years of Justice Department and IRS battles against Swiss banks, taxpayers and enablers over undeclared accounts, which led to settlements with dozens of banks. It also caps a decade in which HSBC, an Asia-focused lender, entered into two other deferred-prosecution agreements with the U.S. and spent heavily on improving internal controls. For the past two years, the Bank of England has warned HSBC that it hasn’t done enough to tackle concerns about handling risks including financial crime and staff conduct.“HSBC Switzerland conspired with U.S. account holders to conceal assets abroad and evade taxes that every American must pay,” said Stuart M. Goldberg, the acting deputy assistant attorney general in the Justice Department’s Tax Division.In a “statement of facts,” HSBC Switzerland admitted that it helped 720 U.S. clients hide $825 million in assets from the IRS. The amount of undeclared assets rose to $1.26 billion in 2007, before dropping by half three years later. HSBC Switzerland offered a variety of traditional Swiss banking services that helped clients cheat the IRS, including advising clients to withdraw less than $10,000 to avoid reporting requirements, and providing credit, debit and travel cards to access funds.Many banks have made similar admissions. UBS Group AG said in 2009 that it helped thousands of clients cheat the IRS and paid $780 million, and Credit Suisse Group AG reached a $2.6 billion deal in 2014. Another 80 Swiss banks avoided prosecution by agreeing to pay $1.37 billion in penalties and voluntarily disclosing their wrongdoing as part of a Justice Department program.HSBC has been caught up in other scandals as well. In 2012, the bank paid $1.9 billion in penalties, admitting that it failed to prevent Latin American drug cartels from laundering money and violated U.S. sanctions against Iran. Within a year, its reform efforts met resistance from leaders of HSBC’s U.S. investment-banking unit -- some of whom mounted a campaign of bullying, foot-dragging and discrediting in-house watchdogs, according to a court-appointed monitor.Soon after that deal expired, the bank agreed in early 2018 to pay about $100 million to resolve an investigation into rigging of currency rates. Later that year, the bank agreed to pay $765 million to settle allegations that it sold defective residential mortgage-backed securities.In the tax case, HSBC bankers told clients not to receive bank statements in the U.S. mail or carry them back from Switzerland. The bank used wholly owned or affiliated companies to offer people in tax-haven countries to serve as trustees or directors of shell companies that helped hide the true owners of accounts. From 2005 to 2007, at least four bankers on the North American desk traveled to the U.S. to advise existing client and troll for new ones at events like Design Miami.On numerous occasions from 2002 through 2006, bankers used an HSBC Switzerland account to purchase art at auction for a client, known as Client 1, according to the statement of facts. On another occasion, bankers used it to pay for a luxury vacation package provider.In 2008, as the U.S. crackdown on offshore tax evasion took root, the bank began forcing U.S. clients with undeclared accounts to close accounts. But bankers helped clients close accounts “in a manner that continued to conceal their offshore assets,” according to the bank’s admissions.HSBC has undertaken “substantial remedial measures and extensively cooperated” with the Justice Department, according to the agreement. It contacted the Justice Department in December 2008, conducted an internal investigation, and reported its misconduct.“We are pleased to resolve this legacy matter,” said Alex Classen, the chief executive officer of HSBC Private Bank (Suisse), who attended the Tuesday hearing. “Over the past decade we have strengthened our compliance function, enhanced our control framework and put in place a comprehensive client tax transparency policy.”In recent years, the bank quintupled the number of employees assigned to spot suspicious activity to 5,000, upgraded its technology and, in 2016, hired Jennifer Calvery, the U.S. Treasury Department’s top anti-money-laundering official, to oversee its efforts.Still, the tax case was left unresolved for at least eight years. In 2011, the IRS went to court to seek information about Americans with accounts at HSBC India from 2002 to 2010. Through 2010, about 9,000 U.S. residents had nonresident Indian accounts of $100,000 or more, and only 1,391 disclosed them to the U.S. in 2009, the IRS said in court filings. The clients had deposits of almost $400 million.In 2013, a New Jersey businessman who cooperated with prosecutors avoided prison after admitting he conspired with five HSBC bankers to hide Indian bank accounts from the IRS. Several other HSBC clients were convicted of tax crimes.HSBC Switzerland has effectively exited the U.S. market, and now has fewer than 5,000 accounts in total, a decrease of more than 85% since the late 2000s, according to the agreement.(Updates with details of the agreement)\--With assistance from Greg Farrell and Yalman Onaran.To contact the reporters on this story: David Voreacos in New York at dvoreacos@bloomberg.net;Jonathan Levin in Miami at jlevin20@bloomberg.netTo contact the editors responsible for this story: Jeffrey D Grocott at jgrocott2@bloomberg.net, David S. JoachimFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Business Wire
HSBC Swiss Private Bank Settles Legacy Investigation With US Department of Justice
HSBC Private Bank (Suisse) SA reached a settlement with the Justice Department to resolve an investigation into its legacy business with US clients.
- Financial Times
HSBC to pay $192m penalty in US tax evasion case
HSBC’s private bank will pay $192m in penalties and admit to helping US customers hide more than $1bn in assets from tax authorities as part of a deferred prosecution agreement with the US Department of Justice. “HSBC Switzerland conspired with US account holders to conceal assets abroad and evade taxes that every American must pay,” said Stuart Goldberg of the DoJ in a statement. The DoJ said that as of 2007, the private bank had $1.26bn in US client assets that had not been declared to the US tax authorities.
- Financial Times
Grant Thornton audit failings must be made more public
With auditors being probed for their work at collapsed contractor Carillion, book-cooking cake shop Patisserie Valerie and grounded travel agent Thomas Cook, public interest in scrutinising company accounts has never been higher. Politicians have blamed audit firms for “conflicts of interest”, “egregious cases of accounting” and “delivering something you know is not satisfactory”. , the Financial Reporting Council has named the company, the external audit firm, the audit partners in breach of standards and the sanctions.
- Financial Times
HSBC reshuffles top team ahead of restructuring
HSBC has announced a reshuffle of its top executives and hired a new chief operating officer, as its interim chief executive Noel Quinn makes his mark on the bank ahead of a big restructuring. The bank, which is due to unveil the restructuring in February, said on Monday that Marc Moses, its chief risk officer, would be replaced by Pam Kaur, head of wholesale market and credit risk, from January 1. Mr Moses will continue to “provide support” to Mr Quinn until next December, when he will formally retire, HSBC said.
- Reuters
UPDATE 1-HSBC announces management reshuffle ahead of new strategy
HSBC has named Georges Elhedery and Greg Guyett as co-heads of the global banking and markets division, which contains the lender's troubled investment banking business, as part of a reshuffle under interim Chief Executive Noel Quinn. Quinn, who replaced John Flint in August, is expected to announce the lender's new strategy at or before its annual results report on Feb. 18. The new co-heads replace Samir Assaf, who has run global banking and markets since 2011 and who will stay with the business as chairman of corporate and institutional banking.
- South China Morning Post
HSBC shuffles senior management as interim CEO Noel Quinn makes his mark on the bank
HSBC is revamping its senior management ranks as interim chief executive Noel Quinn continues to put his stamp on the bank as he hopes to retain the top job permanently.On Monday, HSBC said that Marc Moses, the group chief risk officer and one of only four executives to sit on the bank's board of directors, will step down from his roles at the end of the year and be replaced by Pam Kaur, head of wholesale market and credit risk. He will officially retire from the bank on December 9, 2020.The bank's group chief operating officer, Andy Maguire, will retire at the end of January and Sami Assaf, the long-time head of HSBC's investment bank, will take a new position as chairman of the bank's corporate and institutional banking business.John Hinshaw, a former Hewlett Packard Enterprise executive, will join as group chief operating officer designate on Tuesday. Georges Elhedery, head of global markets, and Greg Guyett, head of global banking, will replace Assaf as co-heads of the global banking and markets business."I'd like to thank each of these individuals for their extraordinary dedication and commitment to the bank over many years," Quinn said in a stock exchange filing on Monday. "In their respective successors we have talented and capable individuals that I'm looking forward to working closely with as we execute plans for the next phase of the bank."Quinn was named interim CEO in August and has been moving to restructure its operations as part of his efforts to "remodel" Europe's largest bank by assets. He replaced John Flint, who was ousted after 18 months in the top job. HSBC reshuffles decks as it braces for more challenging timesAt the time of Flint's departure, HSBC chairman Mark Tucker said a "different approach" was needed to navigate the "complex and challenging global environment" the lender was facing. Quinn is the only internal candidate in a search that is expected to take six to 12 months in total.HSBC, which is based in London, but generates much of its profit in Asia, counts Hong Kong as its largest market and has made a big bet on the future growth of the Pearl River Delta area in mainland China.It has struggled to turn around its operations in the United States and continental Europe, as well as in its capital-intensive investment banking business.In the third quarter, Quinn singled out the bank's business in continental Europe, the US and the non-ring-fenced bank in the United Kingdom as not having "acceptable" performance in the third quarter. The global banking and markets segment reported a 32 per cent drop in pre-tax profit in the quarter.Quinn has previously said he would accelerate efforts to cut costs and shift capital to more profitable business lines or regions, but has declined to discuss his plans until he reveals the bank's updated strategic plan, which is expected before HSBC reports its annual results in February.Hong Kong, the bank's biggest market, has been embroiled in one of its worst political crises for more six months, with protests and civil unrest forcing the city's economy into a "technical recession" in the third quarter.The bank has said the Hong Kong business was "resilient" in the third quarter, but increased its provision for expected credit losses by US$400 million "to reflect the economic outlook in Hong Kong".This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
- Reuters
HSBC announces management reshuffle ahead of new strategy
HSBC has named Georges Elhedery and Greg Guyett as co-heads of the global banking and markets division, which contains the lender's troubled investment banking business, as part of a reshuffle under interim Chief Executive Noel Quinn. Quinn, who replaced John Flint in August, is expected to announce the lender's new strategy at or before its annual results report on Feb. 18. The new co-heads replace Samir Assaf, who has run global banking and markets since 2011 and who will stay with the business as chairman of corporate and institutional banking.
- GuruFocus.com
Stocks That Fell to 3-Year Lows in the Week of Dec. 6
HSBC Holdings, Simon Property Group, Westpac Banking and Molson Coors Brewing present buying opportunities Continue reading...
- Bloomberg
Video-Conference App Zoom Is a Rare Winner in Hong Kong Protests
(Bloomberg) -- As protests jolt Hong Kong business, organizations from Alibaba Group Holding Ltd. to universities are adapting by going digital, switching to video-conferencing app Zoom to conduct online investor briefings and virtual lectures.Zoom Video Communications Inc. joins a number of internet services that have taken off since the unrest began over the summer, from mobile messenger Telegram to work-at-home apps. In a financial hub that thrives on face-to-face deal-making and power lunches, Zoom helps fill a void created by transport disruptions and concerns about personal safety.Hong Kong’s business community leans on the app’s features, which include slide-sharing and support for up to 1,000 call participants, to carry on cross-border communications and with mainland China, where WhatsApp, Telegram and Google alternatives are banned. There’s a local version of Zoom that’s compatible, which is why the app’s downloads in Hong Kong soared 460% in November, after an escalation in protest violence first triggered a spike in September, according to researcher Sensor Tower.Read more: Zoom’s Eric Yuan, the CEO Who Made Videoconferencing Bearable“As schools continue to be in lock-down mode, we’ve had to move our lectures online to minimize disruption,” said Cheung Siu Wai, a professor at Hong Kong Baptist University, adding Skype has been another option.Now valued at $19 billion, Zoom’s shares have almost doubled since listing on the Nasdaq this year. It’s unclear how the spike in downloads may translate into revenue growth for Zoom, founded by Chinese emigrant Eric Yuan, who now resides in California.The company has various pricing tiers and recently added HSBC to a roster of paying clients that includes Uber Technologies Inc. and Zendesk Inc., underpinning 85% growth in revenue to $167 million in the October quarter. Representatives for the company, which is backed by investors including Salesforce.com Inc., Tiger Global and Qualcomm Inc., declined to comment on how the Hong Kong protests have affected its business.”With the periodic traffic disruptions, our colleagues have no choice but to use video-conferencing apps,” said Derek Chan, co-founder of Master Concept, a Hong Kong-based cloud service provider.To contact the reporters on this story: Carol Zhong in Hong Kong at yzhong71@bloomberg.net;Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.netTo contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Vlad SavovFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters
UPDATE 1-UK regulators call time on lengthy glitches in banking services
Regulators made proposals on Thursday to strengthen the ability of banks and payment firms in Britain to cope with major incidents and maintain key services with minimum interruption. The Bank of England and the Financial Conduct Authority have proposed that banks, insurers, investment firms, exchanges and financial market infrastructure (FMIs) firms like Visa that make payments possible, set "impact tolerances" for important services. Firms themselves would quantify the maximum level of disruption they would tolerate in terms of time, volume of business or number of customers affected.
- Bloomberg
HSBC to Leapfrog Barclays in Equity Rankings on Aramco Coup
(Bloomberg) -- Saudi Aramco’s record-shattering stock market debut is redrawing the league tables.HSBC Holdings Plc will be catapulted into the top 10 equity arrangers in Europe, the Middle East and Africa for the first time in five years, kicking Barclays Plc off the list after it missed out on the world’s biggest initial public offering.Aramco alone will be enough to move HSBC up two spots to 10th place on the main league table tracking stock offerings in EMEA, according to an analysis of Bloomberg data. Societe Generale SA, which had a junior role in the oil giant’s listing, will advance one spot to 9th place after the IPO prices Thursday.Barclays is poised to fall two spots to 11th place. If there are no significant changes in the next few weeks, this could be the first full year since 2012 that Barclays hasn’t been in the top 10, Bloomberg data show. The calculations assume that Aramco prices at the top end of its marketed range as expected, hitting its full fundraising target of $25.6 billion.Banks spent years wooing Aramco for a spot on the stock offering, which brings them bragging rights even though they will earn small fees for their work on the deal. JPMorgan Chase & Co., one of the top firms on the Aramco listing, is set to regain its spot as the No. 2 IPO bank globally after the deal. It replaces China International Capital Corp., which is falling two spots to 4th place, and will trail only Morgan Stanley.BOC International Holdings Ltd., the only Chinese investment bank to get a role on the Aramco offering, will vault 11 spots higher to 20th place on the global IPO league table when Aramco prices, the Bloomberg analysis shows. It’s been three years since the state-backed firm was at that level.More than two dozen banks are sharing the Aramco IPO fees, and most will barely make enough to cover their costs after the company decided to shun international marketing of the deal, Bloomberg News has reported. Still, HSBC will benefit more than others. It’s one of three banks, along with Saudi lenders NCB Capital and Samba Financial Group, that oversaw the collection of investor orders after most Wall Street banks were sidelined, people with knowledge of the matter have said.For HSBC, its long-standing local ties could be a major reason for its prominence on the Aramco deal. Its presence in the Middle East dates back to 1889, when the Imperial Bank of Persia was founded. That firm, later known as the British Bank of the Middle East, expanded across the Gulf before being acquired by HSBC in 1959.Local TiesWhen banking activities in much of the region were nationalized in the 1960s and 1970s, HSBC kept its presence in Saudi Arabia through a stake in the newly-organized Saudi British Bank, known as SABB. It doubled down on the kingdom last year, combining SABB with Royal Bank of Scotland Group Plc’s local affiliate to create Saudi Arabia’s third-biggest lender.A number of Middle Eastern banks are getting a rare shot at the limelight thanks to Aramco. EFG-Hermes Holding will jump 19 spots on the EMEA equity rankings to No. 20 once the Aramco IPO prices. This will be the first time the Egyptian bank has been in the top 20, according to Bloomberg data going back to 1999.EFG will also move 55 spots up the global IPO league table, to No. 28. Riyadh-based Samba Financial Group will advance 61 spots to No. 29.(Updates banker table to add special advisers.)\--With assistance from Dimitri Quemard (Global Data).To contact the reporter on this story: Ben Scent in London at bscent@bloomberg.netTo contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net, Marion DakersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
Behold the Most Volatile Call for Bond Yields
(Bloomberg Opinion) -- Stay in one part of the market long enough and you’re bound to know which strategists tend to be bullish and which ones seem permanently bearish. U.S. Treasuries are no exception. Just consider these two divergent views from the ranks of the Federal Reserve’s primary dealers:Steven Major at HSBC Holdings Plc is among those who have long believed in lower-for-longer U.S. interest rates. He and I talked in mid-2016, when Treasury yields hit all-time lows, about how structural forces such as an aging global population create a nearly insatiable demand for safe fixed-income assets. He predicts the benchmark 10-year yield will finish 2020 at around 1.5%, compared with a median estimate of 2% in a Bloomberg survey. That’s bullish.His polar opposite might just be Stephen Stanley, chief economist at Amherst Pierpont Securities. Dating to at least mid-2017, Stanley’s prediction for the 10-year Treasury yield has always exceeded the median estimate.(1)That hasn’t changed for 2020 — he’s the only analyst among the 49 surveyed to see the benchmark U.S. yield back at 3% at the end of next year. That’s bearish.And then there’s John Dunham, who shatters the conventional labels. Dunham, managing partner at John Dunham and Associates, is more bearish on bonds in the coming months than anyone. He predicts 10-year yields will soar to 2.75% by the end of June and climb to 3.03% by the end of September. Even Stanley sees them merely gliding to 2.5% at mid-year and then 2.8% at the end of the third quarter. In Dunham’s scenario, current owners of 10-year notes would face a roughly 10% loss in 10 months.If Dunham’s right, though, those investors ought to hold on for dear life. By mid-2021, he suddenly becomes one of the biggest bond bulls on Wall Street, forecasting 10-year yields at 1.3% for the rest of that year. For those keeping track at home, that’s an even lower forecast than Major’s 1.5% estimate for year-end 2020.This type of market swing, of course, is hardly unprecedented. In fact, the 10-year Treasury yield plunged from 3.25% in November 2018 to just 1.43% in early September as bond traders shifted from expecting more Fed interest-rate increases to rapidly pricing in easier monetary policy. That 182-basis-point range is right in line with the type of move that Dunham envisions. Just on Tuesday, long-term Treasury yields tumbled 10 basis points, the sharpest drop since August.Still, few analysts (if any at all) actually come out and predict that sort of volatility. The tried-and-true playbook is to call for interest rates to rise gradually or fall from their current levels and then tweak those forecasts as the market moves. You just don’t see a forecast slice through the median and average as drastically as Dunham’s does.So, what explains such a turn of events? To Dunham, it’s fairly straightforward: Inflation will take off for a short period in 2020, followed by a recession after the U.S. presidential election (he hasn’t predicted who will win it). He explained his view to me over the phone:“I believe that the administration is going to just do everything it can to crank out money into the economy until the election, just to keep it going. And after the election, they’re not going to ... That in many ways is driving our forecast for a recession happening right after the election. Usually the first quarter is terrible anyway, so that makes good sense that the first quarter would be the time we would tumble into recession.When you start looking at business cost factors, the employment cost index has really been rising rapidly since the recession, we’re seeing the dollar up a lot, that takes up prices. The only thing that’s really been holding things down is commodity prices have been relatively flat. That’s going to turn at some point.We’ve been thinking — and I’ve been wrong about this, admittedly — that there will be decent inflation coming up for a while. We don’t model the Federal Reserve as independent, we model it as a trailing factor. It follows interest rates. That’s why we have them pushing up interest rates, up to that point that we hit recession.”While Dunham doubts the Fed has any ability to stoke inflation, it’s worth noting that just this week, the Financial Times published an article that said the central bank was considering a rule that would allow price growth to run above its 2% target in a “make-up strategy” for years of undershooting its goal. That has interest-rate strategists like Mark Cabana at Bank of America Corp. thinking that current market-implied inflation rates are probably too low.Dunham has called for a recession before. He said in mid-2015 that “we’re now at the peak of the business cycle. And over the next year, year-and-a-half, the business cycle is going to start to turn back into recession.” While that didn’t quite pan out, in that period here’s what did happen: The U.S. stock market swooned, real gross domestic product nearly turned negative and 10-year Treasury yields fell to unprecedented lows.His recession timeline also matches up with the historical signal given by the inverted U.S. yield curve. Three-month Treasury bills yielded more than 10-year notes for much of the period between late May and mid-October. That has usually indicated an economic downturn within 18 months or so. The curve from two to 10 years flipped to negative for a brief stretch in August. Cast those dates 18 months forward, and it’s right around the turn of the calendar from 2020 to 2021.Whether the world’s biggest economy follows that traditional rule of thumb is anyone’s guess. And, to be sure, the Fed has tried time and again to lift inflation only to see its preferred gauge remain stubbornly below 2% for almost all of the past decade. A lot will have to go right — and then wrong — for Dunham’s forecast to play out.At the same time, the likelihood that Treasury yields will hug the median in the coming year seems about equally as far-fetched. Last December, the median analyst forecast for where the 10-year yield would be at the end of 2019 was 3.32%. That’s shaping up to be off by about 150 basis points. It was a closer call in 2018, thanks in large part to the end-of-year bond rally, but the December 2017 consensus still wound up missing by a quarter-point.In other words, predicting the future is hard. Might as well forecast boldly.(1) I'm not including estimates that are a month or two from expiring, which all tend to converge to the prevailing yield level.To contact the author of this story: Brian Chappatta at bchappatta1@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Financial Times
Moody’s cuts outlook on UK banking system from stable to negative
Moody’s has reduced its outlook on the UK banking system from stable to negative, saying Brexit uncertainty has eroded “the country’s growth prospects” while low interest rates are hitting lenders’ profitability. The credit rating agency warned that the “deteriorating” operating environment for UK lenders was “weighing on their asset quality and profitability”. Meanwhile “persistently low interest rates and increased mortgage market competition” had dented net interest margins — a metric that tracks the difference in banks’ cost of funding and the rates they charge to borrow.
- Bloomberg
Apple’s AirPods Fire Up One of Asia’s Top Stocks in 2019
(Bloomberg) -- Luxshare Precision Industry Co. has more than tripled this year, outperforming virtually every major stock traded in the Asia Pacific and underscoring the importance of a certain Apple Inc. product the Chinese company assembles: AirPods.Commanding a 50% share of the nascent true wireless earphones market -- defined by earbuds that have no wired connection between each other or to the music source -- Apple’s AirPods have quickly become an important growth driver for the Cupertino, California company. Wearables are Apple’s fastest-growing category, up 41% in 2019, and are filling in for the iPhone as the company’s growth driver for hardware sales, Bloomberg Intelligence analyst John Butler said.In 2019, AirPods are expected to double to 60 million, rising to 90 million in 2020 and 120 million in 2021, according to Credit Suisse analyst Kyna Wong. Luxshare stands to be the biggest beneficiary of that increase in production demand. It’s the fifth-best performer this year in the MSCI Asia Pacific Index and the fourth biggest gainer on the MSCI China Index. Rival GoerTek Inc. has also surged, climbing more than 180% this year on optimism over stronger demand for AirPods.Read more: Apple AirPods Shipments Are Said to Double to 60 Million in 2019“Annual shipments of AirPods will rise to as many as the iPhone’s in the future,” said Jeff Pu, analyst at GF Securities. “AirPods are expected to be the biggest earnings growth driver among Apple’s hardware devices in the coming years.”Luxshare typically produces basic tech accessories and components, such as cables, chargers and antennas. The AirPods stand out as a higher-value item, which contributed 26% of Luxshare’s revenue in 2018, according to HSBC analyst Frank He. He forecasts that share to grow to as high as 50% in 2020. He also notes that Luxshare is the sole supplier of Apple’s upgraded AirPods Pro model, launched in October, which he estimates will make up as much as 25% of AirPods shipments next year.While Luxshare has grabbed the largest slice of the pie so far, rivals like GoerTek are continually upgrading and vying for more of the lucrative AirPods business. The company’s exclusivity as sole AirPods Pro supplier is unlikely to last, and so it’s not guaranteed to capture all of the demand growth that’s expected. Luxshare’s unprecedented rally also means it’s now trading at a two-year blended forward price-earnings ratio of about 32, well above the roughly 24 sector average.Both Wong and He have recently upgraded their earnings estimates for Luxshare through 2021, citing the increased AirPods demand and improved average selling price. In a research note from Nov. 18, Goldman Sachs analysts including Verena Jeng agreed, saying “The higher ASP coupled with strong market demand from a low base make AirPods Luxshare’s major revenue and gross profit contributor.”(Updates share moves from the second paragraph)To contact the reporters on this story: Cindy Wang in Taipei at hwang61@bloomberg.net;Lee Miller in Bangkok at lmiller@bloomberg.netTo contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Vlad SavovFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Financial Times
HSBC to refund UK customers £8m over missed overdraft warnings
HSBC and Santander UK will compensate more than 115,000 customers after they failed to keep up with new regulations designed to help them avoid falling into their overdrafts. Since February 2018, banks have been required to text customers when their accounts are close to running out of money, to give them time to avoid being charged high fees for using an unarranged overdraft. HSBC will refund £8m to 115,000 customers who were charged without receiving warning texts.
- Moody's
HSBC UK Bank Plc -- Moody's assigns definitive long-term deposit and issuer ratings of Aa3 to HSBC UK Bank Plc; outlook negative
Moody's Investors Service ("Moody's") has assigned definitive long-term deposit and issuer ratings of Aa3 and assigned a standalone Baseline Credit Assessment (BCA) of a2 to HSBC UK Bank Plc (HBUK), the UK ring-fenced bank of HSBC Holdings plc (HSBC Holdings, long-term senior unsecured rating A2, stable). The ratings reflect Moody's assessment of HBUK's low asset risk, stable and diverse profits, low levels of market funding, adequate capital and adequate liquidity.
- Bloomberg
Dear Alibaba, Thank You for the $10 Trillion Gift
(Bloomberg Opinion) -- Has the golden age of asset management finally arrived in Asia? For years, Asia’s hottest unicorns left their homelands to list in New York for one simple reason: a deep pool of U.S. money. And they have been rewarded. From Alibaba Group Holding Ltd. to JD.com Inc., more than a dozen Chinese companies listed there have a market capitalization of $10 billion or more. But Alibaba’s Hong Kong listing may be changing things. The e-commerce giant raised about $11 billion in the city’s largest issuance of stock since 2010, with about one-third of the tranche taken up by mainland Chinese fund managers. Other regional buyers were enthusiastic, too. Taiwan’s life insurer Fubon Financial Holding Co., for instance, placed a $500 million order.This all goes to show that Asian investors are just as wealthy and eager as those in New York, which could go a long way toward making Hong Kong and Singapore more attractive listing venues. The region’s aging savers have amassed more than $10 trillion of wealth in the form of pension funds, mutual funds and insurance policies, HSBC Holdings Plc estimates.(1) With billions to deploy, Taiwan’s insurers and China’s mutual funds may find benefits to trading stocks in their own time zone, if only for their portfolio managers’ work-life balance. Asia’s bustling IPO market also bodes well for the region’s restless unicorns, whose listing window in the U.S. is closing fast after a series of high-profile flops. If Americans can’t stomach Uber Technologies Inc., how will they have an appetite for Southeast Asian clones like Grab or Go-Jek? To make matters worse, U.S. investors have been pulling money out of emerging markets over the past several months. The MSCI Emerging Markets Index peaked in January 2018, while the S&P 500 Index continues to hit daily records.There's one major caveat, however. Local investors can be a tough sell. Foreign money managers tend to think of Asia's biggest startups as a proxy for the macro scene, much in the same way that New York investors saw Alibaba as a bet on China's rising consumer class. Domestic players, on the other hand, are living and breathing the macro picture, so they’re concerned primarily with company metrics. If you’re sitting in Jakarta traffic, you’re acutely aware of the challenges a ride-hailing company there faces; a foreign billionaire like Masayoshi Son just sees a thriving population with thousands of young, mobile-phone users.Super-apps are another example. The region’s hottest unicorns like to pitch these all-in-one platforms to venture-capital investors. To improve operational efficiency, they argue, more cash is needed to expand regionally. But that business model relies on the assumption that the social-media habits of a 22-year-old Vietnamese wouldn’t be too different from an Indonesian’s. This might not fly with a local investor, who's more adept at discerning cultural differences.Deeper local knowledge can also help avoid expensive mistakes. In October, Indian startup Oyo Hotels and Homes raised $1.5 billion from SoftBank Group Corp., among other investors, as it looked to expand into foreign markets. Yet Chinese fund managers largely stayed away — and for good reason. This week, Reuters reported that Oyo is unlikely to hit profitability in India and China until 2022. Similar reports had circulated in local Chinese media months ago, pointing out that the company had no traction on the mainland, even though it boasted of being the largest single hotel brand there. SoftBank’s Son may now have a tough time convincing investors in Hong Kong that Oyo is worth more than $10 billion, the valuation at its latest funding round.In truth, Alibaba may not be the best test case to determine if Asia’s pool of money will slosh toward young companies. Within two business days, institutional investors can swap their Hong Kong-listed shares for stocks in New York, should they feel liquidity in the Asian city is thin. That option to flee to a U.S. haven may have brought hesitant investors on board in the first place. As Asia’s unicorns grow bigger, many are looking at dual listings to ensure there’s enough demand to absorb their sizable offerings. Indonesia’s e-commerce platform Tokopedia PT, for instance, is considering a listing on multiple bourses as it seeks a pre-IPO funding round. This, to me, is a sign that Asia isn’t ready to be self-sufficient just yet. Saudi Arabia may be able to jam Aramco down local investors’ throats; but Asia’s startups are still stuck with a New York investor base that has a diminishing appetite for them. (1) This figure excludes Japan.To contact the author of this story: Shuli Ren at sren38@bloomberg.netTo contact the editor responsible for this story: Rachel Rosenthal at rrosenthal21@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
