Financial News
Author: Hu Xueneng Lin Leqian
2020-08-03 18:13
Last update date: 2020-08-03 18:49HSBC Holdings’ interim results are listed. Taking the second quarter alone, HSBC’s accounting basis pre-tax profit is 1.089 billion yuan (US$‧ the same below), plummeting about 82% year-on-year. Expected credit losses and other credit reductions for the quarter The value reserve (ECL) 3.832 billion yuan, soaring nearly 6 times year-on-year. The stock price fell in the afternoon, hitting a low of 32.95 Hong Kong dollars, a record low after the financial tsunami, closing at 33.4 Hong Kong dollars, still down 4.4%.
Some experts believe that HSBC is clearly going downhill. Under multiple negative factors such as the global economic deterioration, Sino-U.S. disputes, and the decline in interest income, investors are advised to "go fast and go fast." The stock price meets the "2 prefix".
HSBC's mid-term profit fell sharply, which was related to the increase in expected credit losses and other credit impairment provisions. In the first half of the year, expected credit losses on the basis of accounting increased to US$6.858 billion, a five-fold increase year-on-year. The group also announced that the expected credit loss provisions for the whole year It may be between 8 billion and 13 billion US dollars. In addition, due to the fall in interest rates due to the outbreak of the epidemic, the group's net interest margin in the second quarter was 1.33%, down 18 basis points, further weakening interest income.
Tan Langwei: Without open source, performance will only decline
Experts have a weak outlook on HSBC's prospects. Tan Langwei, co-director of Future Securities, believes that HSBC’s performance is not as good as expected. The performance of various businesses such as global banking and capital markets, coupled with the impact of the epidemic on the economy, is expected to continue to reduce interest income; in addition, it is concerned about its political risks. The pressure on both sides of the United States can be described as "fearing the enemy". In the future, the business may face negative factors such as fines and sanctions, saying that "Relying on continuous layoffs and divestitures of business is just a trick of old wine and new bottles. Take an obvious downhill road."
Tan Langwei pointed out that HSBC is currently under pressure from both China and the United States, which can be described as "enemies from the back", and future business may face negative factors such as fines and sanctions. (Profile picture)
He added that HSBC is currently under the control of the Bank of England and is unable to pay dividends. Before the pneumonia epidemic is under control, the market does not expect the company to pay dividends this year and next. He pointed out that "long-term funds have already gone out early in the morning. Investors must have a quick move. Soon, after the stock price crosses the bottom, there are no more reasons to stick to it." It is expected that after the tsunami price of 33 yuan, HSBC will continue to move towards the "2". Investors are advised to absorb the more defensive HEC (2638) And Hong Kong Telecom (6823) are less affected by the economic environment and interest.
Wen Jie: Concerned that regulators will not pay dividends in the first half of next year
Wen Jie, wealth management strategist at Everbright Sun Hung Kai, said that HSBC’s business environment has a lot to do with the closeness of the global economy. Under the drag of the epidemic, the global economy in the second quarter is under too much pressure. However, HSBC is facing poor Sino-U.S. relations. Mainland media criticized that the stock price had fallen before the announcement of the results. The current performance can be described as a rainy night. I believe the stock price will continue to face great pressure. In view of the fact that the global epidemic has not improved significantly, the economy is unlikely to see a V-shaped recovery in the next 3 to 6 months. It can be expected that HSBC's ECL will continue to be high in the second half of the year, and its performance is expected to not change drastically in a short time.
Wen Jie expects HSBC’s expected credit losses and other credit impairment provisions to remain high in the second half of the year. (Profile picture/provided by interviewee)
Wen also pointed out that this time the results show that the UK business ECL has risen the most. It seems that the economic performance of Europe and the UK is worse than expected. He is worried that the Prudential Regulation Authority (PRA) under the Bank of England will continue to prohibit dividends and repurchase requirements. Therefore, at this stage, HSBC also has the risk of not paying dividends in the first half of next year. Purchase is also a potential negative risk factor.
As for the recommendations in the market for HSBC to relocate and spin off its business, he believes that if these suggestions are to come true, I believe it will be good news for the stock price, but this is a decision to be made on an annual basis. It is not recommended to hold HSBC at present. If investors consider “exchanging horses” with holdings, they may consider new economic stocks such as Ali (9988) and Meituan (3690).
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