Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
https://www.scmp.com/news/hong-kong/politics/article/3087451/tiananmen-vigil-thousands-hong-kong-police-officers
Going to be an interesting night ahead I think, HSBC backing Beijing
https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3087457/hsbc-breaks-silence-and-backs-national-security
Unsure if this will have hit UK press deadlines but the first article I’ve see I English detailing HSBC support to Beijing proposals. Equally uncertain what view Boris and Trump will have around this, with their very public stance being opposite ? Remains to be seen if HK people react by pulling their business from HSBC, so impact to SP also unclear as pleased China masters but alienated local public, licensing country for trading currency ie USD and home country HQ ?
The kind of behaviour where matters are personalised is what discredits,so let’s keep to the facts please. Q1 results were after just a few weeks of Covid impact. Yes, bad debt will dramatically hurt lenders and shareholders over the longer term if mass defaults occur, however, impact in great numbers is not instant. If it does, the quality of the asset book in first place was of such poor quality, then one should question the risk management of the lender ? My point is bancassurance development is something that has irritated customers to the extent retail banks rarely comment around it as lost income, it is what will have badly hurt HSBC in Q1. This will continue in second quarter as mainland border remains closed. There is also another hidden issue I’ve not mentioned previously also, the volume and value of lost loans where HSBC has been forced to exit customers and their loans due to poor attention to regulatory requirements. This was another significant feature during 2019 and the impact again progressively damaging results, but it’s easier to portray as defaults as implies the blame lies elsewhere. HSBC specific detail, not generalist comment not market speak. The stock has rebounded well in favourable conditions the past few trading days, this does not mean the fundamental issues created and facing this business are gone nor can be ignored.
I understand (Chinese friend says Chinese press) If true they have today publicly come out in support of the new HK law, hardly a surprise as the matter will not cause that much outrage in West. Saved relationship with Chinese masters and will tell West had no choice , just as told China had no, choice over Huawei. Bad loans is the headline excuse used by bancassurers for 20+ years, the massive repatriation of mainland monies is the big money spinner that has gone missing in Q1 and the instant profits drop. Very silly if think bad loans occur that quickly
A couple of good articles which tie together really, despite taking very different approaches to the situation here and the respective SP of leading players. HSBC is termed as suggested but has lost the love of HK people over it’s various actions of past year ie perceived allegiance to mainland government and dividend removal, even though beyond their control. There is quite a bit not covered in the articles also, namely the heavy group reliance upon mainland cash converted into insurance premiums, take a look at the correlation of Q1 profits and a closed border., that’s where the huge loss and threat lies as immediate whereas loan book is not. What will happen to boomed (Huge) housing market and heavy HSBC stake in local mortgage market if HK is the loser in the middle of super powers ? Just take a look at not just the broker conclusion versus Standard Chartered but the respective rebound of Prudential yesterday and again today by comparison. Thanks for sharing
Why I don’t post online normally, as most that do personalise matters when opinions differ. I’ve said enough now to explain what I see. As for something not being right, that’s all I was saying also, not about politics but business ethics.
I’ve already explained my holding or lack of. Also provided a lot of local insight, both in terms of their place in the market here which is a lot more and ever increasingly critical to the SP. Holding a negative view is that any less balanced than those who are clinging to hope of profit by hearing good news ? 160/170 years of history means little in the changing landscape here, what comes next and how handled is what matters
So a long term view needed, hmmm. More time that goes by, the more the Asia strategy becomes critical and the question of allegiance to West or East becomes potentially more sensitive. The more heated the environment , the more they will be called out to show their hand. There is more to their future than the Asian economy post virus and potential trade wars, it’s about whether they are placed in position of choice. High stakes, and not like seen before.
Slippy fingers from that slippery slope ?? !! I have an opinion not an agenda, I have offered plenty across a range of subjects to illustrate why. I’ve already stated completely open to contra views and then watch the situation unfold.
Thanks, in agreement of long term picture and fear Fridays also at present with such market turbulence. HK markets strong today but artificially so I suspect in similar fashion to Fed intervention in US but should boost PRU nevertheless. I’m not sure about the tech innovation as regulators in each jurisdiction will need be on side and unlikely to circumnavigate the key China/Hong Kong ‘border’ but who knows what that changing landscape may throw up either positive or not ? If that resolved, Pru in theory should have significant foothold ahead of major competition, as HSBC have clowns running the show and struggling to keep both US and China happy simultaneously. If all plays out that way, the buy and hold could be very very tasty and tempting
I sincerely doubt the potential low has been seen yet, nothing like it in fact, but a glimmer of hope for those holding by support given to Hang Seng index this morning. Media interpretation is Trump didn’t provide specifics around financial actions to be taken in relation to HK, my own is somewhat different. We are witnessing massive artificial support to global markets at present, with the Fed bolstering US markets to levels majority of experts find bewildering. Before making any decisions based around what media advises, take note that both HKMA and mainland equivalents will be shoring up HK markets and confidence in similar fashion, recent dips have seen Chinese mega stocks supported to extent index has been protected. HSBC remains torn between 2 masters, their critical USD licence holder and their profits engine that is China. They’ve ridden both horses to date but quoted article below is calling them out to make choice. Given they have managed to appease both to date, they’ve not exactly thrived with this advantage have they ? Slippery slope getting more steep and oily.
Politics - Regarding broader political picture, it’s fair to say that HK can either continue to rise or fall devastatingly. It all depends upon whether the required Beijing message is to support it’s continued success, simultaneously ****ing a snook at the West, or to transfer operations elsewhere. As already been done with manufacturing to neighbouring Shenzhen and financials to Shanghai or even Zhuhai, next to Macau and again within the Greater Bay Development area, where HK was once the only bright light but could be left to rot for being the problem child.
Sanctions - the removal of privileges may be significantly greater than some headlines you may have feared, they could spell huge issues for China, HK and just as much HSBC. Wait until full ramifications unfold before drawing conclusions is my advice, I fail to see that this can be anything but bad news for HSBC to overcome and some serious choices to be made - see Reuter’s article yesterday. As for expansion into Europe and America, really ? France business of 100 branches to be sold, US should be as not making money but will be preserved for USD licence and UK landscape not much better, hence Quinn putting additional eggs into Asian basket. Consider all these factors and a bank that has failed meet these challenges to date now has to overcome significantly more ? I was mocked yesterday at 373p low, the market will deliver the I told you so in weeks ahead I suspect
My comment was not meant to be political, just highlighting the reality of the situation now faced in trying to serve 2 masters. Arguably have managed it to date but now going to be even harder and probably beyond them, nothing suggests have capability to do so.
As Trump pulled the plug, a loud roll of thunder boomed around Hong Kong and the heavens opened for the hour that followed, eerily symbolic again, for those who enjoy melodrama !! As shared earlier, nobody has forgotten HSBC the global appeal advertising of some circa 10 years ago, the reality is somewhat different in terms of connectivity for customers and profit contribution. They have failed on both and in several other ways, with a catalogue of legal issues, one thing that has fulfilled their global boast. The group performance is dominated by China/Hong Kong and public intent was to further that and shed other parts of the world. My earlier posts highlighted the success of their relationship skills with local HK government, HK public and Beijing, all have expressed severe discontent in past 12 months and from both sides of the political argument. London HQ ? Cool retreat during sweaty season in Asia, reinventing the wheel to justify existence but reality is clear, mainland money gateway to the world. What now ?
Personally I think all forms of technical analysis are out of the window on this one. A unique situation where political situation has now compounded years of arrogant mismanagement, the culture of the organisation is rotten as years of censure have proven. Expect anything, but for sure a continuation of the falling SP and no dividend to compensate, the Pyrrhic victory of recent years.
Thanks for the comments, just offering opinion from what I know to be true. Anyone free to offer contra view, especially if factually correct as are my own observations., or at least based upon knowledge available to me. I would not call them a troll if they have something differing to my views
Breaking news on Reuter’s :-
‘HONG KONG, May 29 (Reuters) - Former Hong Kong leader Leung Chun-ying on Friday called out banking group HSBC Holdings plc for not making its “stance” clear on China’s imposition of a new security law on the city, after the United Kingdom’s criticism of the move.‘
Which master to choose ? USD licence holder or source of majority of profits ? Declined to comment is the answer, I bet they did !! Looks like Trump attention today will be diluted by events in Minneapolis, could be the China and particularly HK stance may become clear a little later ? Nevertheless, 373p floor under threat as I type ??