RBC Capital Markets has lowered its rating and price target on HSBC Holdings (LON:HSBA), arguing that the shares are vulnerable to the impact of an expected slowdown in China’s economy resulting from Beijing’s trade dispute with the US, Proactive Investors reports. The comments come ahead of the Asia-focused lender’s upcoming third-quarter results.
HSBC’s share price has slipped into the red in today’s session, having given up 0.26 percent to 605.10p as of 10:10 BST. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.32 percent higher at 6,977.24 points. The group’s shares have lost just under a fifth of their value over the past year, as compared with about a 7.4-percent fall in the Footsie.
RBC trims stance on Asia-focused bank
RBC lowered its stance on HSCB from ‘sector perform’ to ‘underperform,’ trimming its price target on the shares from 560p to 730p. The move came after the US imposed tariffs on $250 billion of Chinese imports this year.
“HSBC’s share price has historically been 72 percent correlated to the GDP growth of the countries in which it operates, it is therefore vulnerable to a fall in GDP in one of its significant geographies,” the analysts pointed out, as quoted by Proactive Investors, adding that the Asia-focused lender’s “direct exposure to China is 11 percent of profits however this increases to 59 percent if we include indirect exposure from Hong Kong and Singapore whose own economies are strongly correlated to Chinese growth”.
HSBC to post Q3 results on Monday
HSBC is due to update investors on its third-quarter performance on Monday, after Barclays (LON:BARC) kicked off the banking reporting season today. Lloyds (LON:LLOY) reports tomorrow, with RBS (LON:RBS) to follow on Friday.