HSBC shares weighed down by Covid-19 pandemic
The lender will unveil its first quarter results next week, with the stock under pressure due to the economic fallout from the Covid-19 crisis ahead of its latest set of earnings.
HSBC will unveil its first quarter (Q1) results next week, with the stock under pressure due to the economic fallout from the Covid-19 crisis.
So far this year, HSBC has seen its share price fall 30%, with the bank forced to suspend dividend payments throughout 2020 in a bid to strengthen its balance sheet during these uncertain times.
In fact, the world’s local bank told investors in March that it will not make any quarterly or interim dividend payments, or any share buy-backs until 2021.
HSBC warned shareholders that due to the global impact of Covid-19, and in particular its influence on central banks’ decisions to lower interest rates, it forecasts lower-than-expected revenues in insurance manufacturing, as well as higher than expected credit losses.
HSBC will unveil its Q1 results on 28 April.
Barclays maintain ‘underweight’ rating for HSBC
Analysts at Barclays remain underwhelmed by HSBC in 2020, reiterating its ‘underweight’ rating for the stock and lowering its price target to 420p per share.
HSBC is trading at 416p a share as of 15:30 (GMT) on Monday.
Barclays justified its assessment of HSBC by pointing to its earnings challenges for 2020 and beyond into next year, though conceded that it and fellow lender Standard Chartered could both benefit from a ‘sentiment rebound if Asia emerges from Covid-19 earlier’.
Speaking more broadly about the impact of the coronavirus pandemic on UK banks, analysts at Barclays said that while ‘potential for losses is high’ it believes that bank shares ‘effectively price in a severe downturn’.
‘We estimate current valuations imply £70bn of aggregate losses for our UK banks, or 50% off domestic bank capital,’ Barclays said in a note.
‘We expect a combination of painful rate cuts and weak activity to drive pre provision profits down circa 20% year-on-year,’ Barclays added. 'Likely strong Q1 trading income could prove to be an aberration.’
How to trade stocks with IG
Looking to trade HSBC and other stocks? Open a live or demo account with IG and buy (long) or sell (short) the asset using derivatives like CFDs in a few easy steps:
Create an IG Trading Account or log in to your existing account
Enter ‘HSBC’ in the search bar and select it
Choose your position size
Click on ‘buy’ or ‘sell’ in the deal ticket
Confirm the trade
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
React to global volatility
Market volatility continues as coronavirus concerns amplify. Trade with IG and take advantage of:
- Tight spreads – from just 1 point on major indices, and 2.8 on US crude
- Guaranteed stops – they’re free to use, and only incur a fee when triggered
- Round-the-clock assistance – our highly skilled team are available when you need support
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
