Shares in HSBC Holdings (LONN:HSBA) have fallen into the red in today’s session, with investors reacting negatively to the group’s new strategy which will see Europe’s biggest bank invest between $15 billion and $17 billion as it looks to return to growth. Reuters noted in its coverage of the news that the announcement marked new chief executive John Flint’s first public indication to shareholders of the strategy he intends to pursue at the Asia-focused lender.
As of 10:25 BST, HSBC’s share price had given up 0.90 percent to 723.30p, underperforming the broader UK market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.72 percent higher at 7,736.03 points. The group’s shares have added a little over four percent to their value over the past year, as compared with about a 2.7-percent gain in the Footsie.
New strategy at HSBC
HSBC updated investors on its strategy today, saying that it was targeting a return on tangible equity (‘RoTE’) of greater than 11 percent by 2020, while investing between $15 billion and $17 billion, primarily in growth and technology. The company plans to sustain dividends at current levels and undertake share buybacks going forward.
“After a period of restructuring, it is now time for HSBC to get back into growth mode. The existing strategy is working and provides a strong platform for future profitable growth,” the group’s chief executive John Flint commented, adding that HSBC would “accelerate growth in areas of strength, in particular in Asia”.
Analysts at FTSE 100 bank
Credit Suisse, which has a ‘neutral’ rating on HSBC, set a valuation of 740p on the shares on Friday, while Goldman Sachs, which is also ‘neutral’ on the Asia-focused lender, priced the stock at 790p earlier in the week. According to MarketBeat, the FTSE 100 group currently has a consensus ‘hold’ rating and an average price target of 762.12p.