Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Meanwhile cases rise in HK and lockdown measures to be reintroduced. The vital border reopening to mainland will be further pushed back and that remains a massive revenue leak for HSBC. I doubt there is little urgency in Beijing as HK suffers
Would seem so with shares trading at a 25 year low but seems the move led by HK confidence following mainland China major insurer increasing their stake. Apparently reassured around dividend reinstatement By HSBC.
I’d not be too confident around HSBC being able to rely upon traditional Western relationships, particularly if Trump/Pompeo want a sacrificial lamb. The timing of the ‘leak’ last week in lead up to US election is curious , with Trump running with an agenda around HK treatment and ‘The China virus‘.
Allied with a local rumour a major whistle blowing story is about to inflame that particular fire, confidence in the fickle Hang Seng index arena might see it revert to its stumbling fall all the way down of recent times. Would certainly act as a catalyst for attention Trump would feed off !!
Theoretically now it should not fall below 300p again with such confidence but again there too many variables surrounding the political, economic and COVID picture.
Good luck all, much more to run with this story.
‘HSBC told the Financial Times "all the information provided by the ICIJ is historical" and predated the conclusion of the bank's deferred prosecution agreement with the US Department of Justice in 2017. Standard Chartered said: "We take our responsibility to fight financial crime extremely seriously and have invested substantially in our compliance programmes."
HSBC and Standard Chartered like to wear the British badge but are making all their money in Asia for the former, the latter maintaining links to more global hot spots that are dodging international sanctions eg the Middle East.
Why is this significant ? Well who investigates them in these countries ? The local regulator of course, who in the case of HSBC and HK is the Hong Kong Monetary Authority. Does Woods really believe they exact the desired standards the UK or broader international community on face value at least demands ?
Reality - HKMA in particular, like all of these regulators, have a vested interest in the continued operations of these organisations and the profits they derive. No more less so than HK in transition.
Reality - HKMA is linked to Beijing, China needs a gateway to the West via HK and HSBC for vast funds of all kinds in and out.
Reality - HSBC hurriedly created large teams ahead of last visit to tidy up the fact they had belatedly and retrospectively adopted better practices, which they describe as fulfilling their obligations but fail to add the DPA was extended not removed.
Reality - Recruited staff to these teams desperately scrambled to find another role post visit, the infrastructure created for the illusion was disbanded soon after the inspection took place. Having been sold the importance of new roles, they disappeared and left individual careers stranded. Fortunately the global headcount reductions Circa 35k will be achieved elsewhere as HK needs people to keep the money rolling in.
Reality - the outcome was an extension of the DPA with a further fine, the ‘conscience tax’ that is taken periodically.
Reality - COVID is being blamed for dwindling income and bad loans provisions, actually HSBC undertook a rapid and vast exit of numerous large corporate accounts ahead of visit. Their failure to apply what required since DPA meant they needed rapidly dump relationships that would expose their ongoing failures to comply in interim period.
Reality - when attempts are made to share any HSBC wrong doing in HK, Mr Woods’ operation quote the HK activities being in another jurisdiction and outside of their remit, yet continue to allow these entities to fly under the Union Jack. Fines are a complete irrelevance, only custodial sentences will seek to alter traits that date back to the Opium Wars. These regulations are laws but how many have served custodial sentences ? Watch Netflix Dirty Money for answer or let me tell you, NIL
Reality - watch Narcos on Netflix and watch the cartels murdering at will, real entities to whom there were
Right on cue to my earlier post, far too heavily involved in matters that can ruin them and investors cash.
Futile trying to hide behind potential other banks‘ involvement and trying to turn a massive wrong into a right, the track record and arrogance as well as their geographical link preferences, make them front and centre of this.
Defence quoted as all obligations fulfilled ? DPA ( deferred prosecution agreement ) wasn’t exactly agreeable, it was rolled over for a further period. A further fine levied like an ongoing ‘conscience tax” with access for more reparations in future. Anyone curious around background to this, watch 2 x Netflix shows, Dirty Money and Narcos Mexico series. Read a little more about the Panama papers also, the timing and names involved make for all kinds of believable conspiracy theories. Theories can often be the truth.
Pompeo and US own conscience now heightened in election run up ? Trump wanting big heads on sticks for China virus ? If you think this too big a name to be a casualty in the fallout of 2020, then consider household names you’ve seen fall for various reasons in your lifetime and many much smaller than the present global political conundrum. As suggested for some time now, HSBC is massively exposed for more than economic reasons at present, if US has belated appetite to make example of them due to COVID and HK kick back, it would be no surprise would it ? Moreover, would Beijing care about arguably HK’s biggest jewel and last bastion of Empire influence, being collapsed and job done that suits their cause ?
Probably too fanciful a notion for those who failed to heed warnings at the crazy low of 373p just a few short months ago ? If your investment sits at the centre of several global arguments of the day, traditional economics and SP history will be your only friends whilst you sit there smelling something burning - it’s your cash and share certs (for those whose faith has ridden the long train wreck downwards).
Manage your own risk reward, just remember you may be reading about it on front pages not financial in the coming months.
Just popping back to say I told you so to those who didn’t want to listen, sometimes it pays to look beyond your own price target. Oh how I would love see the lows find a new range in the £2s this week !!
To offer hope, unlike the Western world, China seems to have the virus contained with measures the rest of world would not have the ability to apply. Whether that means they will open gate to HK again soon might have broader considerations, I’m told they are full steam ahead again on mainland but may not wish to afford that to those who have created a different challenge ? The other PRD cities have been positioned as alternatives.
So, my input again is around a local perspective, not the long range preferences of those seeking to suggest they understand the critical trading environment. Management is poor locally, mix of small minded locals promoted with diversity in mind and the tax haven seeking hierarchy whose personal affairs for some, Stuart Gulliver, have been scrutinised previously and more should follow by HMRC. Let’s hope they have upset Boris enough to prompt some digging, not just for those present in HK but hold accounts here.
Again, my cautionary words are centred around the volatility of several matters they are linked to, either like many others at this time in history and by their actions.
New security laws mean the political nature of this stock and comment upon it is a freedom that bears risks for those residing in HK.
My views around the volatility of this business have been well documented, they deserve what comes to them as the world will no longer tolerate them playing both sides I hope. The SP has fallen as I thought and others didn’t enjoy the obvious being shared. Now has fallen so far it has a fighters chance of bouncing but it will be a dirty fight . They are adept at that but may find themselves without allies.
Signing off I wish all well, there are significantly more ethical speculative plays out there than this one.
Such an endearing phrase, created to soften the blow of external image.
Heard it all before, if so much fat exists then how badly run are things ? I think your rationale is way outdated, ask any customer suffering endless lapses in service over many years.
Your esprit des corps as a retiree must warm the hearts of those still wanting to work and maintain your dividend.
The headline and early paragraph content reads positively but later there is reference to the all important USD licence I have referenced previously.
HSBC has been under DPA for many years and this remains in place, which if they fall foul of conditions or US favour, could see them stranded internationally and for the Beijing purposes quoted. . I believe Huawei cooperation was around time of last review possibly ?
Hmmm how might Trump and others feel about things next time around ?
Quite amazing how expressing an opinion that does not sit comfortably with those with a contra view here results in personalised response !
If employed for 40 years by HSBC then I suspect you have witnessed much of what I share first hand ? Unfortunately 35,000 and more will not be enjoying that ride when Quinn’s axe falls, those remaining will predominantly be located in Asia where working time directives are regarded with the utmost disregard.
My sympathies around your losses if they and my honest sharing of facts and possibilities pains so greatly. Your timeframe might need stretch a little further into your retirement , however, perhaps a Chinese take over May bail you out quicker ? Then it’s a question of various personal views beyond allegiance to a bank you once knew.
As repeated several times previously, good luck to all but please let’s lift the tone by not making matters personal just because opinion does not suit. Surely your proud 40 years deserves better response that that ?
From tomorrow, after a sudden rise in cases following excellent results stemming from mask adherence for months, HK enters into probably its most severe lock down yet. All food establishments will be closed to diners, which if you’ve visited HK , you will know that eating out is very much part of local and ex pat life.
The opening of the border with mainland is looking like something stretching far off into the distance. I would not be surprised if it remains closed into 2021. Economic downturn has quietened the local voice, there was no rush to reopen when SARS hit.
I’ve long spoken of how I feel this will raise political stakes and, how with US election looming, there will be additional stresses added to the region.
The trend graph continues and with the very good reasons shared. If there is any validity August 3rd it will need be honest explanation of lost revenue from redistribution of mainland wealth and not the traditional nonsense around loan provisioning, which is always designed to lay blame at defaulting clients.
Unless broader market strength provides some insulation both up to and after announcements, then the downward path goes on. If 2020A delivers worse than expected then assume a lot worse for rest of year and into real dangers.
I’ve thought it a while, they are in big trouble.
I’ve kept quiet a few days as didn’t want to upset those feeling the pain of falling price I provided much warning of.
As for feel for HSBC ? They have got away with daylight robbery over decades and escaped with slimmest of punishment - watch Dirty Money on Netflix.
Without getting into politics, propaganda works on both sides of the fence, they told China they were forced by US to cooperate over Huawei. If they had any moral fabric they would not have needed to be forced if felt there were any issues to be concerned with. Now they are choosing the more profitable route, with little regard for why that is more lucrative, so don’t let’s damn the regime if they are again seeking to gain from it without any conscience.
Expect UK headquarters might be diluted under the guise of home working in the future, they rarely tell the true story.
It’s a position they have benefited hugely from compared to UK Peres and made their bed and now must lay in it. This is just the beginning of global tensions in my opinion and leaves them as vulnerable as any. What a trophy it would be to see mainland buy out of the pseudo British Bank, HKMA has already made courting comments in recent months.
Many locals have used divines their pension for years and now tasting what thousands of global employees in other countries have suffered, disappointment.
Feel for them ?
Ask the 35,000 Quinn is keen to ditch at the earliest chance post COVID .
Ask the thousands of families impacted by drug cartel money laundering
I could go on.......
I’ve shared some thoughts elsewhere on likelihood of mass exodus and adaptability.
Interesting article with a very telling paragraph, those who left who went back to chase the money, that is what defines Hong Kong people as Chinese. Best of both worlds wanted, the tax regimes of UK and Australia won’t be enjoyed one tiny bit by comparison .It needs to be remembered the spiralling house price inflation the previous rounds of migration brought to the cities quoted, ask Canadians in Vancouver !!
I have little sympathy you may deduce, personal experience has seen national traits that leave one feeling best if both worlds is sought.
There is more than one societal debate to be had around this. How many have a history as a family in HK before 1947 when millions fled newly created communist regime ? Boris British conscience around their part in helping HK prosper saw many prosper way beyond any wildest Western dreams and personally I think they won’t be going anywhere if the money keeps flowing and they can keep, it arms length from Beijing. Certain banks, not mentioning any names are particularly adapt at that, of course portraying image of adherence to regulations and being handsomely rewarded to do so. Western regulators might take keener interest around controls moving forwards, on both sides of the divide.
That latter point could have considerable bearing upon business performance and share prices, so take note in your considerations. AML veneer might get scratched a bit more deeply than previously as political will increases, especially where allegiance has been publicly declared.
Trump doing opposite as he doesn’t like foreigners , green cards and student visas effectively on stop and apparently India are now irritated as their talent pool production is very reliant upon US education.
Aussies are presently in panic over outbreaks in Melbourne particularly and some new cases in Sydney, hence I don’t think welcome mat is out to Asians of any description for now. There’s a lot of tension with China and concerns around influence in Australian politics, agriculture and volumes of students circa 10% of population or something crazy like that. So I don’t see them stepping forward as already cashed out and now regretting selling selves.
Canada similar with Vancouver nicknames Hongcouver given the wealth that flooded there and distorted housing market horrendously. Not heard anything specific so that tells a story probably.
Yes there are multiple other options in EU, with Portugal and Greece marketing heavily on local internet channels.
I believe there is a difference between the “deals” and Boris British conscience offer, the former are residency for short period with no guarantees is my understanding, whereas Boris seems to be saying if you like it and stick around we offer the full monty of citizenship and passport indefinitely.
I bow to more qualified knowledge if contra offered, but I think some of these dream villa solutions are not what appear or at lease by comparison ?
Respond to both reple posts with one.
I’ve given my overview around thoughts on mass migration to UK in post elsewhere on board. I don’t naturally like to generalise but the work ethic you mention is mostly true although creativity of thought isn’t strongest as very much a culture of seeking direction and then applying it without much flexibility.
I don’t think any great numbers will make the switch, especially if Chinese investment replaces or adds to existing Western input. Money talks here more than anywhere, which if they do make the move then it will need be permanent unless local property market falls. There is a danger that UK is seen through rose tinted spectacles, a massive shock in several ways if do.
As for results, my personal view is there are numerous risks that need to be considered and possibly overcome in the immediate future and medium term. The broader Asia approach has been via traditional retail banking play of launch a credit card in local market and build from there, first phase I believe has been relatively successful but that’s very much the easy part done. The real money lies in China and as widely shared already that could mean anything in the extreme, either positive or negative ? It’s not a British Bank now, despite the figureheads being Western, it’s very much an Asia play for investors.
Just sharing some local knowledge guys, you pay your money you take your chance ! Good luck to all and if you can make money from them then well done, as aware of the myriad of risks.
Outlook will be full of BS, so I actually think results will be very telling. Expect the virus to be blamed for what gone and to possibly come, which is actually fair enough. Of course, the process of removing the livelihood of 35,000 at this sensitive time won’t have had much impact as yet. Will be interesting to see if any reference to currency peg threat as that certainly would have severe considerations if not implications if were to occur. I’d be expecting an opinion around that from one of largest banks seeking shareholder support and selling the near future.
As for storming past £4, it will need to a whole lot further to satisfy the long time investors whom have had a horror run. Perhaps that why it does not stay there, as positions are ditched and losses cut ? One analyst downgrade last week, let’s see the consensus after latest numbers shared.
Given the slippery slope the stock has been on then what prompted the confidence and in what timeframe ?
Half year results will be sorely impacted by closed border with mainland. and with increased cases seen this past week, there is unlikely to be any quick end to that major blow to profitability.
Record borrowing quoted in other threads as a possible positive, only up front arrangement fees will have immediate impact if HSBC has their slice of that pie. Given concerns around existing asset quality which saw huge provisions at Q1, would any significant increase in most strained economic times be prudent or in line with what is likely to be a reduced risk appetite unless they are desperately chasing numbers ?
Add in Trump still on their case with threat of removed currency peg a likely doomsday scenario, then another question mark there, alongside the overall economic and markets outlook dragging them possibly down also. Only broader optimism fuels a rise for me, as seen in last month or so with temporary rises.
The reasons to doubt are numerous and transparent, so other than the lowly start point, where does the good news to create such a bounce come from ? The elusive vaccine perhaps which will offer all others hope ?
History should show us HSBC always very close to the next scandal, with so much out of sight, will it be selectively out of mind also ? The pieces of the jigsaw aren’t fitting any more.
I totally agree Trump will be hell bent on a combination of nationalistic chest beating, and laying blame at China’s door for everything that COVID has created plus much more. The trade war messages will be repeated and ramped up, it makes you wonder whether global equities will withstand, unless continued central government intervention in both east and west continue to support for foreseeable ? It all could get very ugly eventually.
Contemplating the currency peg being pulled, surely this spells disaster for HSBC and shareholders ? I’m surprised shares didn’t drop more or whether will today, led from HK Hang Seng index trade ? Perhaps dismissed as Trump hot air threat so far ?
What does it potentially mean ? Well HK and HSBC in a large part, has been China’s gateway to the West with their goods and currency. My understanding is, if the peg is removed the likelihood is the currency becomes destabilised and massive dollar reserves will be needed to stop the local and mainland currencies having to pay significantly more for USD. In having publicly announced Asia strategy as all in approach recently, HSBC is going to see profits savaged under this scenario and margins in other Asian markets eroded, due to inevitable capex cuts that would surely follow as a chain reaction to lower profitability ?
The ‘British Bank’ is right at the eye of a potential storm appearing on the financial radar. It could take another course, but if doesn’t then share price surely falls at mere prospect ? At what point do western investors wake to this reality and the follow up of stock cheapening to extent that a takeover from China becomes not just inevitable but the only choice ? A previous post covers the uncertainties that surround state intervention and impact that may have.
Remember what the initials stand for, it appears Trump does.
https://www.lse.co.uk/news/HSBA/hsbc-hit-as-white-house-said-to-weigh-future-of-hong-kong-us-peg-c2ykw2gd3rqgpft.html
Significance of this possibility not factored in yet, I won’t pretend to understand how significant it would be but cab be sure it’s a huge game changer.
Beware the unknown in this case, unless someone wants to educate why it could be a positive ? I’d be thinking a liar if did, unless you want to hasten moves towards a mainland buy out and be a shareholder in Chinese bank instead ?
Well done that 373p to 400p or just over seems to be the trading range just for now.
Having fallen so far already, you’d like to think any breakout is upwards but so many factors shared recents weeks. Today TikTok left citing the new law and who might follow ? The big Western names here , Facebook and `google, they aren’t going to fit moving forwards. The landscape may see big Chinese players replace but also heard today that any registered in HK will need pay local tax but also the difference to mainland, which is considerably higher.
Proceed with care has always been my message