Q1 could scarcely have gone better, in Asia
Whilst HSBC shares still show the ravages of investor disdain stemming from a dire 2018, Friday is their best day since January, with a 3% rise at best.
- Q1 pre-tax profit +31% to $6.20bn, best in 14 quarters, forecast: $5.58bn
- Adjusted revenues, +9% to $14.4bn, 3 times the pace of adjusted operating expenses
- Core capital ratio rebounded to 14.3% after falling 50 basis-points in 2018
The biggest caution in the results was ironically represented by HSBC’s best return to previous strengths. 80% of Q1 profits were derived from Asia, with just 1% from Europe. And whilst the CEO’s aggressive spending crackdown helped all key divisions rebound, regionally, only Asia shone. Three years after a 14-year lawsuit over HSBC’s U.S. Household International ended, it still sees stateside operations as its “most challenging strategic priority”. Problem operations also showed little progress. Stock dealing tanked 34%, the worst equities performance across U.S. and European banks, leaving markets revenues down 5%.
Asia-over-dependence, intractable U.S. drag, and lacklustre rest-of-world has kept the share reaction measured most of the session. The buyback pencilled in for the half-year amid improving capital could underpin the stock’s recovery. But Q1 momentum looks unsustainable. And of all giant lenders, HSBC has certainly been amongst the least predictable lately.
- Stock reaches top of 660p-686p resistance zone
- Technical/fundamental outlook suggests near-term gap fill; watch 670p support
- True deterioration would be symbolised by a break of 200-day average support (latterly 655p)
- Remaining above 670p would imply conquest of the resistance zone soon
HSBC Holdings CFD [03/05/2019 12:53:44]
Source: City Index
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.