Broker snap: Investec downgrades HSBC after recent outperformance

Shares of HSBC Holdings are currently close to five-year highs and further upside is limited, according to Investec which has cut its recommendation from 'buy' to 'reduce'.The broker said it was "perfectly comfortable" with HSBC's first-quarter results last week which saw sharply lower impairments and an improving cost performance broadly offset weak revenues.However, after the stock's recent outperformance (up over 7.0% over the last month), analyst Ian Gordon "recommend[s] a switch into what we see as an oversold Standard Chartered ('buy') which becomes our top pick, even ahead of Barclays ('buy').Gordon said: "Underneath all the optical complexity, the key issues for HSBC do appear perfectly simple. It is generating far more capital than it is able to deploy, and as such, muted (or non-existent) loan growth coupled with continuing net interest margin pressure translates into poor cost:efficiency metrics and inadequate returns."The stock was down 0.79% at 738.94p before the end of trade.BC