Following on from full year results, the bank leads the FTSE 100 fallers.
HSBC price plummets as global economic disruptions take its toll
- Lagging China, concerns over trade talks and Brexit uncertainty drive profits and revenues lower than estimates.
- Increasing focus on Asian markets and an attractive dividend yield stands firm for investors.
- We maintain a medium risk “buy” for an income geared portfolio.
HSBC leads the FTSE 100 fallers list this morning following on from full year & fourth quarter results, which highlighted concerns over the US/China trade talks, a slowing Chinese economy and Brexit.
For the year, profits and revenues were lower than estimates at $21.7 billion and $53.8 billion respectively. Getting a grip on the group’s costs is another area of concern and the bank suffered over the final quarter when clients held off doing business over the period due to more challenging market conditions and a weaker economic outlook, meaning its target of a rise in income to be greater than a rise in costs was missed.
The bank has moved its focus increasingly towards Asia in recent years and makes the majority of its profits from the region. The comparatively new CEO and his pivot to Asia plan hopes to benefit on the faster potential growth.
The attractive dividend yield of around 5.9% has been a focus for many private investors and they will note that the dividend has been held at lasts year’s levels. The tone of the results suggests that for the short to medium term, the yield could be the main attraction.
We maintain a medium risk “buy” for an income geared portfolio.
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