HSBA.L - HSBC Holdings plc

LSE - LSE Delayed price. Currency in GBp
+8.95 (+2.31%)
At close: 4:38PM BST
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Previous close387.65
Bid396.35 x 0
Ask396.55 x 0
Day's range385.50 - 398.80
52-week range5.76 - 741.00
Avg. volume56,174,511
Market cap80.77B
Beta (5Y monthly)0.57
PE ratio (TTM)22.16
Earnings dateN/A
Forward dividend & yieldN/A (N/A)
Ex-dividend date27 Feb 2020
1y target estN/A
  • China Isn’t Using Its Currency as a Cold War Weapon

    China Isn’t Using Its Currency as a Cold War Weapon

    (Bloomberg Opinion) -- The deterioration of U.S.-China relations is fast and furious, with Washington throwing out accusations of unfair trade practices, unlawful technology transfer and an early cover-up of the coronavirus outbreak, which has claimed over 100,000 American lives. The Chinese yuan, this year’s beacon of stability, is now is now at risk of tumbling like other emerging markets currencies.On Wednesday, the offshore yuan, which trades freely, flirted with its weakest level on record, dropping as much as 0.7% to 7.1965. While Thursday morning’s yuan fix came in stronger than expected, the overall sentiment is downbeat.It’s tempting to theorize that a weaker yuan could become a powerful weapon in the new Cold War, yet there’s little evidence of foul play from the People’s Bank of China. Since mid-2017, the central bank has based its fixing on the previous day’s close, dollar movement overnight against a currency basket, and what it calls the “countercyclical factor," a catch-all metric that grants wiggle room to deviate from market fundamentals. The yuan can move in a 2% trading range around the PBOC’s daily target.Take a look at Goldman Sachs Group Inc.'s estimate of the countercyclical factor. Over the last year, the PBOC has been consistently guiding its yuan stronger, not weaker, to artificially track the dollar. For all the theatrics of getting labeled a currency manipulator, Beijing wasn’t making its exports any cheaper.What’s new this year is the PBOC’s Zen-like attitude. Rather than playing the heroic fireman, handling one crisis after another, the central bank has been largely hands-off. It has used the countercyclical factor in a meaningful way only twice since January, on Feb. 4 when China emerged from the Lunar New Year holiday to face a national lockdown, and at the end of March when the outbreak was shaking up global markets.And why should the PBOC adhere to the dollar anyway? The coronavirus downturn has only showcased America’s exceptionalism — it prints the world’s reserve currency. Haven demand for the dollar has surged, evidenced by soaring currency swap rates from the euro zone to South Korea, and the Federal Reserve’s scramble to re-establish swap lines with other central banks. Looking back to 2008, the greenback only started to weaken two months after demand for “emergency dollars” peaked, data provided by Deutsche Bank AG show.So it makes sense for China to adopt a more enlightened approach, allowing the yuan to weaken during periods of dollar strength, and catch up when global tensions recede. From the PBOC’s view, the trade-weighted yuan is certainly stronger now than it was last fall, when the central bank was in fire-fighting mode. China doesn’t want to spend another $1 trillion of its foreign reserves defending its currency. The rapid drawdown in 2015 and 2016 traumatized the Chinese for good.To be sure, the pressure of capital outflows is still there. Just look at the consistent negative value of the “net error and omissions” figures in China’s balance of payment data. However, here’s the beauty of the virus: The Chinese can’t go anywhere. They can’t come to Hong Kong to buy insurance products, and unless you’re ultra-rich (with private bankers around the world apartment-hunting for you), Manhattan real estate is off-limits. The PBOC has less to worry about than before.So now the market can test the true value of the yuan. It could easily drop below 7.30 if the phase one trade deal breaks down and the Trump administration imposes some of the tariffs it had previously threatened, estimates HSBC Holdings Plc.Long-time China bear Kyle Bass abandoned his yuan short in early 2019 for the greenback-pegged Hong Kong dollar. He didn’t profit from his yuan trade because the PBOC established powerful tools, such as selling yuan-denominated bills in the offshore market, to kill anyone betting against the currency. Now that their interests are becoming aligned, it’s time for the bears to wake up.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • HSBC Board Pressures Executives to Deepen Restructuring

    HSBC Board Pressures Executives to Deepen Restructuring

    To cope with the economic fallout of the pandemic, the board of HSBC wants executives to deepen restructuring efforts, which may include further job cuts.

  • HSBC Takes Full Control of German Unit With Landesbank Deal

    HSBC Takes Full Control of German Unit With Landesbank Deal

    (Bloomberg) -- HSBC Holdings Plc is taking full control of its German business as Europe’s largest lender restructures its global operations in smaller markets, and targets Asia for growth.The bank will acquire an 18.66% stake in HSBC Trinkaus & Burkhardt AG from Landesbank Baden-Wuerttemberg, a regional lender in the south of Germany, according to statements by the banks on Monday. They didn’t disclose a price.HSBC is pivoting to Asia and planning 35,000 job cuts amid sluggish revenue in its other markets, especially in continental Europe, though the coronavirus pandemic has put key parts of that program on hold. Net profit in HSBC’s German unit fell almost 17% last year to 98 million euros ($107 million) after the bank recorded a rise in loan impairments.HSBC Trinkaus & Burkhardt had total assets of 26.6 billion euros ($29 billion) and employed more than 3,000 people at the end of last year. It warned in February alongside its full-year results that earnings in 2020 would likely remain “adversely affected” because of the difficult economic backdrop.HSBC will hold 99.33% of the registered share capital after the deal closes, and plans to squeeze out remaining investors. LBBW said the stake it sold in the business was “a purely financial investment,” while London-based HSBC declined to comment further.The bank makes the majority of its revenue and profit in Asia, and announced its revamp in February after pressure from investors to revamp European and U.S. divisions that have held back its performance.HSBC’s planned sale of its French retail bank could take 4,000 to 8,000 workers off its payroll, a person with knowledge of the matter said in October. The lender is also planning to partially exit stock trading in other Western markets, including Germany, the U.S. and the U.K., Bloomberg News had reported.(Adds details throughout of HSBC’s restructuring and German performance)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Bloomberg

    Huawei CFO Gets First Chance at Release in Extradition Fight

    (Bloomberg) -- The chief financial officer of Huawei Technologies Co., fighting extradition to the U.S., gets her first shot at release this week in a case that’s triggered an unprecedented diplomatic tussle between the U.S., China and Canada.On Wednesday, the Supreme Court of British Columbia is set to release a decision on whether Meng Wanzhou’s case meets a key threshold of Canada’s extradition law. If Associate Chief Justice Heather Holmes rules that it fails to meet that test, Meng could be released from house arrest in Vancouver. If not, extradition proceedings will continue.The case was triggered when Meng was arrested on a U.S. handover request in December 2018 during a routine stopover at Vancouver airport, a city where she owns two homes and often spent summer holidays. The fallout has since spanned three countries.Meng, the eldest daughter of Huawei’s billionaire founder, Ren Zhengfei, has become the highest profile target of a broader U.S. effort to contain China and its largest technology company, which Washington sees as a national security threat.China has accused Canada of abetting “a political persecution” against a national champion. In the weeks after her arrest, China put two Canadians -- Michael Spavor and Michael Kovrig -- in jail, halted billions of dollars in Canadian imports and put two other Canadians on death row, plunging China-Canada relations into their darkest period in decades. U.S. President Donald Trump muddied the legal waters further when he indicated early on that he might try to intervene in her case to boost a China trade deal.Canadian Prime Minister Justin Trudeau -- caught between his country’s two biggest trading partners -- has resisted any such attempt to interfere in the high-stakes proceedings, saying the rule of law will govern Meng’s case.“Canada has an independent judicial system that functions without interference or override by politicians,” Trudeau said last week in response to comments by the Chinese ambassador that Meng’s case was the biggest thorn in Canada-China relations. “China doesn’t work quite the same way and doesn’t seem to understand that we do have an independent judiciary.”China’s foreign ministry urged Meng’s release at a regular briefing in Beijing Tuesday, saying the U.S. and Canada had “abused their bilateral agreement on extradition.”“Canada should correct its mistake and immediately release Meng Wanzhou and ensure her safe return to China to avoid continuous damage of China-Canada relations,” ministry spokesman Geng Shuang said. He said the rights of Kovrig and Spavor had been “guaranteed and protected.”Escalating FightMeng, 48, faces tough odds: of the 798 U.S. extradition requests received since 2008, Canada has refused or discharged only eight cases, or 1%, according to Canada’s Department of Justice.Whether she goes free or continues her battle against U.S. extradition, the ruling is likely to further escalate the fight between Washington and Beijing, increasingly at loggerheads over everything from the coronavirus pandemic to the status of Taiwan and Hong Kong to trade and investment.Huawei continues to play a central role in those tensions. Earlier this month, the Commerce Department barred chipmakers using American equipment from supplying Huawei without U.S. government approval, closing a loophole in an effort to cut the Chinese company off from essential supplies used in its phones and networking gear. The move drew condemnation from Beijing and warnings from Huawei’s rotating chairman, Guo Ping, that the latest U.S. curbs on its business would cause the whole industry to “pay a terrible price.”The U.S. government has lobbied its allies, including Canada, to ban Huawei from next-generation 5G networks, saying its equipment would make such infrastructure vulnerable to spying by the Chinese government. Despite that, the U.K. said in January it would allow Huawei a limited role. But in recent days, British media have reported the government is backtracking and preparing to end Huawei’s presence by 2023.Trudeau has been stalling on Canada’s decision with the fates of Spavor and Kovrig hanging in the balance. The two detainees have been confined for more than 500 days without access to lawyers. In contrast, Meng was photographed by CBC News on Saturday as she posed with nearly a dozen colleagues and friends -- social distancing rules to fight the virus notwithstanding -- displaying victory signs in front of the courthouse.The pursuit of Meng by U.S. authorities predates the Trump administration: officials were building a case against her since at least 2013, according to court documents in her case. Central to the case are allegations that Meng committed fraud by lying to HSBC Holdings Plc and tricking the bank into conducting Iran-related transactions in breach of U.S. sanctions.Wednesday’s ruling will focus on whether the case meets the so-called double criminality test: would Meng’s alleged crime have also been a crime in Canada?Her defense has argued that the U.S. case is, in reality, a sanctions-violations complaint framed as fraud in order to make it easier to extradite her. Had Meng’s alleged conduct taken place in Canada, the transactions by HSBC wouldn’t violate any Canadian sanctions, they say. The U.S. bank and wire fraud charges carry a maximum term of 20 years in prison on conviction.If the ruling goes against her, Meng’s next court hearings are scheduled for June and are set to continue to at least the end of the year. Appeals could lengthen the process for years longer.(Updates with China foreign ministry comment from eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Bloomberg

    HSBC’s Board Orders Executives to Consider Deeper Cuts, FT Says

    (Bloomberg) -- The coronavirus pandemic has prompted HSBC Holdings Plc’s board to order a review of the bank’s recent reorganization, according to the Financial Times.The health crisis requires more drastic measures than those announced three months ago in what was HSBC’s biggest overhaul in its 155-year history, the newspaper said in its Tuesday edition, citing senior people at the London-based bank it didn’t identify.HSBC in February announced plans to cut 35,000 jobs, $4.5 billion in costs and $100 billion of risk-weighted assets by reducing its U.S. and European businesses and investment bank, though the pandemic has since prompted management to pause layoffs.The board is now pressing executives to restart the overhaul and consider even more dramatic changes, the FT said. Those include further cuts or even a possible sale of its U.S. business as well as its retail network in France and operations in smaller non-strategic countries. A spokesperson for HSBC declined to comment on the report.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • U.K. Banks Exposed to Hong Kong Fall Amid Political Turmoil

    U.K. Banks Exposed to Hong Kong Fall Amid Political Turmoil

    (Bloomberg) -- U.K.-listed banks with heavy exposure to Hong Kong slipped as China’s attempt to tighten its grip on the city fueled a political backlash.HSBC Holdings Plc dropped as much as 6.5%, the most in about seven weeks, while rival lender Standard Chartered Plc declined 4.7%. Insurer Prudential Plc tumbled 9.8%, its biggest fall in more than two months, before paring losses along with the banks.China confirmed on Friday that it would effectively bypass the city’s legislature to implement national security laws. The announcement triggered immediate calls for fresh protests and sent the MSCI Hong Kong index to its worst loss since 2008.“China’s latest move is damaging to gross domestic product, sentiment, loan growth and Hong Kong’s status as a global financial destination,” Bloomberg Intelligence analyst Jonathan Tyce said in written comments. HSBC and Standard Chartered each derive a quarter of their revenue from Hong Kong, and “far more” of their pretax profits, he added.Banks operating in Hong Kong, as well as luxury-goods makers, have been volatile since the final quarter of 2019 as protests gripped the city, sending it into recession. The global spread of Covid-19 spurred share plunges in 2020.Prudential, which has seen its shares plunge 28% year-to-date, is also highly exposed to the former British colony. Hong Kong accounted for 23% of the London-based company’s adjusted operating profit in Asia in 2019, more than any other market in the continent, according to the group’s annual report.And it wasn’t just European financials dropping on the Hong Kong developments, as luxury-goods makers that are dependent on sales in the city also slipped. Cartier watch-maker Compagnie Financiere Richemont SA and Gucci-owner Kering SA fell as much as 4.1% and 2.3% in Zurich and Paris, respectively.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Bonds Rally in India After RBI Announces Emergency Rate Cut

    Bonds Rally in India After RBI Announces Emergency Rate Cut

    (Bloomberg) -- Sovereign bonds in India rallied after the central bank cut its benchmark policy rate in an emergency session as the economy reeled from the coronavirus outbreak.The yield on the most-traded 2029 bonds dropped seven basis points to 5.96% at the close after falling more than 15 points intraday, while that on the new 10-year notes slid three basis points. The rupee weakened and stocks reversed gains to halt a three-day rally ahead of a long weekend.The Reserve Bank of India slashed the benchmark repurchase rate by 40 basis points, offering more support for an economy headed for its first full-year contraction in more than four decades. Bond traders have been calling for more support with concern mounting over a surge in government borrowings.Average yields on top-rated rupee-denominated corporate bonds maturing in 10 years fell 15-20 basis points on Friday, according to traders. The decline would be the most since May 8, according to data compiled by Bloomberg.“The RBI cuts may not overwhelm the market and the rally may not last beyond a few days as the market was expecting a 50 basis point cut,” said Naveen Singh, head of fixed-income trading at ICICI Securities Primary Dealership. The market needs to see a bond purchase calender given the huge supply of debt, he said.The rupee fell 0.5% to 75.9650 per dollar and the S&P BSE Sensex index slid 0.9%, set for the second straight week of declines. A gauge of lenders declined 2.6% to the lowest level in more than a month.READ: India Cuts Rate to Lowest Since 2000 To Revive Shrinking GDPThe central bank painted a bearish view of the economy, saying it expects Asia’s third-biggest economy to contract in the fiscal year through March 2021 as the impact of the coronavirus and measures taken to contain the pandemic wiped out consumption -- the backbone of the economy.“The RBI’s worries around economic growth are dragging the equities down,” said Sameer Kalra, an investment strategist at Mumbai-based Target Investing. “Rate cuts don’t matter as much as nobody wants to take or give loans as confidence is lacking.”Here are other views of stocks and fixed-income analysts:DBS Bank: (Radhika Rao, economist at DBS Bank in Singapore)“Relief for the bond markets front was absent and until a formal announcement is made, we expect intermittent securities’ purchase as part of liquidity operations to continue”Key priorities will be to lower credit risks, channelize funds to credit-starved sectors and prioritize financial sector health, which will also involve the government’s participationSundaram Asset Management: (Dwijendra Srivastava, CIO for debt)“Today’s rate cut will just act as a sentiment booster. It isn’t going to help the smaller borrowers in a big way as lenders continue to be risk averse. Authorities need to ensure that banks start taking credit calls and lend to lower rated corporate issuers.“Investors are inclined to buy only highly-rated company debt as there are worries about delinquencies rising due to the sharp slowdown of the economy.”HDFC Securities: (Deepak Jasani, head of retail research)“The governor’s comments about the economic situation deteriorating more than expected is weighing on sentiment. Investors are also concerned about how we are running out of stimulus after both the government and the central bank have done their part“With most of the country still under lockdown these steps may not have a direct benefit”Serenity Macro Partners: (Manish Wadhawan, founder and former head of rates trading at HSBC India)The carry trade on Indian bonds has turned lucrative after RBI’s rate cut, with repo rate at 4% and 2029 bond yielding nearly 6%With limited fiscal space, RBI will have to do the heavy-liftingFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Debt Woes Derail India’s Plan to Deliver Bigger Fiscal Boost

    Debt Woes Derail India’s Plan to Deliver Bigger Fiscal Boost

    (Bloomberg) -- On the night of May 12, India’s Prime Minister Narendra Modi set the nation of 1.3 billion people abuzz with promises of unleashing a massive stimulus to shore up an economy facing its deepest recession in decades.A week later and after five drawn-out press conferences by his Finance Minister Nirmala Sitharaman, the entire package of about 21 trillion rupees ($277 billion), or 10% of India gross domestic product, underwhelmed economists and investors alike. Many worked out that the actual fiscal cost amounts to just about 1% of GDP, sending stocks and the rupee down in the immediate aftermath.Read More: $277 Billion Package May Not Give Immediate Boost to IndiaThe looming threat of a credit rating downgrade to junk may have held officials back from delivering a more immediate boost to the economy through, for example, direct cash handouts to citizens. India is facing public debt levels of 77% of gross domestic product, according to Fitch Ratings Ltd., and a fiscal deficit in double digits this year, putting it on the path for a rating cut.Authorities are already opening up the bond market and need to borrow more to plug a revenue hole, so they can’t afford to lose an investment grade rating by straining the deficit further.​“The government appears to have given a fair degree of weight to the risks of a downgrade on account of risks from a high fiscal deficit and rising debt-to-GDP ratio -- a clear recipe for future instability in macros, especially currency depreciation,” said Shubhada Rao, head of economics at QuantEco Research in Mumbai.Even after the latest package, “the threat of a downgrade still exists” because of the likely sharp slump in the economy, she said.Job LossesAccording to Prachi Mishra, chief India economist at Goldman Sachs Group Inc., GDP will contract an annualized 45% in the second quarter from the prior three months. For the full year through March 2021, GDP is forecast to decline 5%, which would be deeper than any recession India has ever experienced.Businesses have been clamoring for more state support to cushion the blow from the harshest stay-at-home rules in the world, which has left millions jobless. Former government officials and central bankers have increasingly called for extraordinary measures to counter the fallout.What Bloomberg’s Economists SayEven though we expect India’s GDP to contract and debt-to-GDP ratio to vault up in fiscal 2021, we don’t think a ratings downgrade would be justified. Looking ahead, recent structural reforms announced by the government should, in fact, continue to support the country’s investment grade rating.\-- Abhishek Gupta, India EconomistFor more research and insight, click hereIndia was already under fiscal stress before it entered the current crisis. The economy had been steadily slowing on the back of a credit crunch and slump in consumption, reaching an estimated 5% in the fiscal year through March, the lowest in more than a decade. The government missed its budget deficit target last year and set a goal of 3.5% of GDP for the current fiscal year.Now, that’s likely to blow out even more as revenues suffer due to slowing growth. Citigroup Inc. is forecasting a fiscal deficit of 7.4% of GDP, a level last seen in 1991. Adding the shortfall from India’s 28 states would push up the deficit to 11.4% of GDP.HSBC Holdings Plc estimates the true fiscal cost, after including borrowings by public sector entities, would stand at 13.3% of GDP this fiscal year. Moreover, the economic package includes government guarantees worth 2.1% of GDP to small and mid-sized businesses and shadow banks -- and while that’s not a problem immediately, it would add to the fiscal deficit over time as defaults rise, HSBC said.That’s a frightening prospect for many, and may invite a downgrade. Fitch Ratings and S&P Global Ratings rate India’s debt at the lowest investment grade level, while Moody’s Investor Service has an assessment one notch higher.While none have commented after the recent measures, Fitch said last week it saw India’s public debt zoom to more than 77% of GDP in the current fiscal year, from its previous forecast of 71%.With a downgrade likely to derail India’s ambitions of being included in global bond indexes and be part of a massive investment pool, Sitharaman is hoping rating companies will hold off on any move.“The whole world is hit by coronavirus, so the ratings agencies will obviously have to see each economy in relation to the other,” Sitharaman told the Times of India in an interview published this week. “If my macroeconomic fundamentals are better than many, many other economies, that would come into play,” she added.Concerns over a rating downgrade did not hold the government back from announcing a bigger stimulus, she told a local television channel on Wednesday.The government is planning to boost its domestic borrowing by more than 50% this year to plug the hole caused by sliding revenues and rising spending. That caused a sell-off in bonds and added to calls for the Reserve Bank of India to support the debt market, including directly purchasing government securities.Given the tight spot India finds itself, there’s no easy way out.​“This is what you would call the hard place and the rock,” said Subhash Chandra Garg, a former top Finance Ministry official. “It’s definitely a tough situation. As a government you have to manage your finances on one hand and manage the economy, production, GDP growth, income in the country, on the other.”(Updates with comments from finance minister in 16th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • $277 Billion Package May Not Give Immediate Boost to India

    $277 Billion Package May Not Give Immediate Boost to India

    (Bloomberg) -- India’s 21 trillion rupee ($277 billion) virus-relief package fell short of economists’ expectations, providing fiscal measures that will help improve growth over the years without delivering an immediate boost to an economy that desperately needs it.Analysts have been pouring over the details provided by Finance Minister Nirmala Sitharaman over the past five days, and the conclusion of many is that the additional spending boost is far less than the 10% of gross domestic product that the headline number suggests. HSBC Holdings Plc estimates a fiscal cost of just 1% of gross domestic product.“Markets were expecting a more immediate demand-side stimulus,” HSBC economists led by Pranjul Bhandari, wrote in a note. “True that some measures to remove immediate distress are contained within the package. However, a large part of the attention has been towards medium-term supply-side measures.”​​The rupee fell the most in Asia on Monday, tracking stocks as investors discounted the rescue plan. The currency declined as much as 0.5% to 75.97 per U.S. dollar in a third day of declines. The S&P BSE Sensex of stocks slid 2.6% at 2:35 p.m. in Mumbai.Some of the key measures outlined by Sitharaman include: loan guarantees for small businesses, cheap credit to workers and farmers, tax breaks for service providers, increased foreign direct investment in defense manufacturing and a suspension of new insolvency proceedings for up to a year.Here’s a look at what economists are saying about the support package:How much of this money is new spending?Much of the economic package includes measures already budgeted by the government and the central bank.“Only about 10% of this stimulus can be traced as direct additional budgetary cost to the central exchequer,” said D.K. Srivastava, chief policy adviser at EY India. “Nearly 5% of the stimulus relates to already budgeted expenditures.”Rahul Bajoria, an economist at Barclays Plc in Mumbai, said the measures include 8 trillion rupees of support already announced by the Reserve Bank of India. He estimates the actual fiscal impact on the budget will be only 1.5 trillion rupees, or 0.75% of GDP.What kind of a boost will the package provide?The main focus of the government’s measures is providing a $72 billion liquidity boost for small businesses, shadow banks and electricity distributors, as well as loan support for farmers. Small businesses are the bedrock of the $2.7 trillion economy, employing more than 110 million people.Loan support helps to cushion the blow for businesses but won’t boost consumer spending, a dilemma that many countries around the world are facing as job losses mount. The spending and reform measures proposed by India’s government are more geared to improve supply-side bottlenecks and support economic growth in the medium- to long-term. It doesn’t provide citizens with a cash boost to spend.“Providing financial support to keep units alive is good,” said Pronab Sen, program director with International Growth Centre and a former chief statistician of India. “That’s necessary to begin with but that’s only step one. Step two is demand support. If this is all they are going to give the demand support will not exist.”What does this mean for economic growth?India’s services industries, which make up more than half of GDP, weren’t specifically targeted in the government’s relief package. Businesses from airlines to hotels to entertainment centers will continue to struggle despite the financial support measures outlined.“The fiscal packages announced so far have stayed clear of sector-specific announcements that target the more vulnerable sectors, such as travel, tourism, hotels and restaurants,” Sonal Varma and Aurodeep Nandi, economists at Nomura Holdings Inc., wrote in a note.Goldman Sachs Group Inc. economists said the structural reform measures announced by the government are more medium-term in nature and won’t result in an immediate boost to growth. They see GDP contracting 5% in the fiscal year through March 2021, which would be India’s deepest recession ever.Read More: Goldman Sees Worst India Recession With 45% Second Quarter SlumpWhat happens next?A nationwide lockdown was extended for a third time through May 31, with some incremental easing of curbs to allow economic activity to resume. Companies are facing difficulties reopening factories though -- primarily because of travel restrictions, conflicting rules, broken supply chains and a shortage of workers.With the fiscal package out of the way, the focus will once again shift to the central bank to provide support. The six-member monetary policy committee will likely cut interest rates again in early June. It’s already lowered rates by 75 basis points this year and injected billions of dollars into the financial system through money market operations.“Given the extension of the lockdown, the RBI, in our view, should cut the repo and reverse repo rate by 75 basis points in the upcoming June policy or at least cut the reverse repo rate by 75 basis points while cutting the repo rate by 50 basis points,” said Kaushik Das, an economist at Deutsche Bank AG in Mumbai.(Updates with comments from economists in third and last paragraphs.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Goldman Sounds the Death Knell for High-Yield Savings Accounts

    Goldman Sounds the Death Knell for High-Yield Savings Accounts

    (Bloomberg Opinion) -- Goodbye, high-yield savings accounts. We hardly knew you.For years, the oxymoronic products were a resounding success for both consumers and financial institutions alike. After getting almost zero interest from big U.S. banks, individuals who parked their excess cash with the likes of Ally Financial Inc., Barclays Plc, Goldman Sachs Group Inc.’s consumer bank, Marcus, or HSBC Holdings Plc’s HSBC Direct were suddenly bringing in a comparatively bountiful 2% or more around this time last year. At that point, the Federal Reserve had raised its short-term interest rate for what would be the final time this cycle in December 2018. The rest is history. First, the Fed felt compelled to lower interest rates three times from July through October to offset the economic impacts from the Trump administration’s trade wars. That, as I noted in an October column, brought prevailing high-yield savings rates dangerously close to the fed funds rate. And yet, in early 2020, Marcus users could still lock in that 2% magic number by opting for a no-penalty certificate of deposit.Then the coronavirus happened. This chart says it all: As it’s plain to see, there’s now a chasm between the fed funds rate and the going rates on some top high-yield savings accounts. The banks have so far moved lower gradually, likely to avoid sticker shock that would cause their customers to take their deposits elsewhere. But even with online banking’s cost-saving advantages over more typical brick-and-mortar institutions, they can’t defy gravity forever. Eventually, rates will have to head closer to the zero lower bound. These savings accounts will still hang around but will hardly seem to fit the moniker of “high yield.”Marcus announced the cut to its savings rate on May 8 with this message:“Effective today, the rate on our Marcus high-yield Online Savings Account has been adjusted down to 1.30% from 1.55% APY. We understand that this isn’t welcome news. During this unprecedented time, please know that the rate on our Marcus Online Savings Account remains highly competitive with an APY that’s still 4X the national average. You can rest assured that we continue our commitment to providing value and helping your money grow.”“For a guaranteed return, consider adding a fixed-rate No-Penalty CD. You’ll earn a high-yield rate with the flexibility to withdraw you balance beginning 7 days after funding. Our 7-month No-Penalty CD currently earns 1.55%.”The marketing is top-notch. First, it’s transparent about being bad news, but then quickly pivots to play up that Marcus still provides comparatively more interest than accounts at Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. The announcement also wastes no time suggesting a no-penalty CD to make up for the lost interest (and, in a benefit to Goldman, create a “stickier” deposit). Marcus is a relatively new venture for Goldman, and it seems reasonable to assume the investment bank will operate it with Chief Executive Officer David Solomon’s “evolutionary path” in mind. Goldman is looking to diversify away from historically volatile trading revenue, much like its Wall Street rival Morgan Stanley. If it means running Marcus with tight margins to keep customers in the fold, so be it.A bank like Ally, on the other hand, may have less flexibility. Heading into this year, it was fresh off of an upgrade by S&P Global Ratings to BBB-, one step above junk. That upswing didn’t last long; it was one of 13 banks that S&P put on negative outlook earlier this month. Analysts said it “could be more sensitive to the economic fallout from the Covid-19 pandemic than the average U.S. bank. We attribute this sensitivity to Ally's sizable concentration in auto lending that may face heightened risk of financial distress in the current economic environment.” Also a risk: “Ultra-low interest rates will weigh on net interest income,” which accounts for more than 70% of Ally’s net revenue.Ally, for its part, also knows how to sell itself. “People don’t want to hear messages that are depressing and that add to their anxiety,” Andrea Brimmer, chief marketing officer at Ally, told the Financial Brand in an article published last week. “They want to hear optimism and they want to hear about purposeful ideas that make them feel like the world is going to kind of get back to normal.” The theme of a campaign promoting its savings options: “Is your money not sure what to do with itself?”Whether Ally, Barclays, Marcus or HSBC are the answer to that is an open question. As it stands, these interest rates barely cover the market-implied inflation rate over the next 10 years. That’s somewhat by design, of course — the Fed cuts rates in part to encourage borrowing and purchases of riskier assets, both of which boost the economy more than parking cash in a high-yield savings account. Stocks, however, seem increasingly detached from the current economic reality. In that sense, Ally’s focus on being unsure might resonate with individual investors.Future interest rates on high-yield savings accounts are on equally shaky ground. While there’s not much in the way of precedent, it’s safe to say they’ll continue to offer more than the rock-bottom rates on money-market funds. Banks will probably do whatever they can to delay going below 1%, a round number that could be the last straw for some individuals. Other than those parameters, though, anything is possible; such is life at the zero lower bound.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Coronavirus: Canary Wharf creates plan for workforce return
    Yahoo Finance UK

    Coronavirus: Canary Wharf creates plan for workforce return

    Plans to bring back thousands of workers to Canary Wharf include one way routes, lift restrictions and removing soft furnishings.

  • Coronavirus: Firms struggling to receive £50k bounce back loan
    Yahoo Finance UK

    Coronavirus: Firms struggling to receive £50k bounce back loan

    Business owners feel let down by leading banks as they struggle to access £50,000 bounce back loans.

  • Coronavirus: Canary Wharf draws up return-to-work plans for offices
    Yahoo Finance UK

    Coronavirus: Canary Wharf draws up return-to-work plans for offices

    Bankers, lawyers, and accountants will have to follow one way systems and strictly limit the number of people in elevators, among other precautions.

  • Goldman-Backed FX Platform Clinches HSBC, Citigroup Funding

    Goldman-Backed FX Platform Clinches HSBC, Citigroup Funding

    (Bloomberg) -- A Singapore foreign-exchange platform has won financial backing from HSBC Holdings Plc and Citigroup Inc. just as its trading volume more than doubled on coronavirus-driven volatility.HSBC and Citi join Goldman Sachs Group Inc. as investors in Spark Systems after participating in series B funding that’s raised $16.5 million over two rounds, according to Chief Executive Officer Wong Joo Seng. Citi and HSBC representatives confirmed their companies have invested in Spark. OSK Ventures International Bhd., a Kuala Lumpur-based investment firm, also joined the current round, which brought the firm’s valuation to $70.5 million, Wong said.Wong said the amount raised will be sufficient for the next three and a half years, though more investors will participate in the current round later this year.The timing for the fund-raising has been propitious. Currency trading skyrocketed across the globe earlier this year when panic selling in the coronavirus-induced market meltdown triggered a stampede for dollars and fueled demand for lightning-fast pricing.“Trading started to surge into late February just as the contagion spread,” said Wong.Singapore, already Asia’s biggest currency-trading hub, is wooing the world’s top banks to set up electronic-pricing engines in the city state to win a bigger slice of the $6.6 trillion-a-day foreign-exchange market. The island nation posted an average daily trading volume of $640 billion in April 2019, and ranked third globally behind the U.K. and U.S, data from the Bank for International Settlements show. Spark currently provides clients with prices from banks such as JPMorgan Chase & Co. and UBS Group AG that have pricing systems set up in Singapore, according to Wong.“We are executing in Singapore on a one to two millisecond time basis,” he said, noting that executions in London or New York could take on the order of 380 milliseconds, so the time savings from the regional operation is substantial.Spark’s platform helps boost Singapore’s position as a low latency financial hub, said Alaa Saeed, global head of electronic platforms and distribution of CitiFX and Gavin Powell, HSBC Singapore’s head of global markets.The start-up, which is backed by the Monetary Authority of Singapore, recorded an average $5.5 billion-a-day trading volume during the first quarter, up from $2.5 billion during the same period in 2019. But the slowing global economy is now starting to dampen activity in the second quarter, Wong said, with average trading volume sliding to $4.5 billion to $5 billion a day.“If you have GDP shrinking, if you have numerous companies that are badly affected, it will affect the level of economic activity and the amount of forex being traded,” he said.The vast majority of the firm’s trades currently involve Group-of-Ten assets, but Wong sees opportunities for the firm to boost its capabilities in emerging-market currencies such as the Korean won, Chinese yuan, Malaysian ringgit and Indonesian rupiah.“We see Singapore as a very natural hub for corporate treasury and for emerging market currencies price discovery,” he said. “We’d like to be the center where that is being traded.”(Adds BIS data in sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Oil Falls With Doubts Over a Demand Recovery Looming Over Market

    Oil Falls With Doubts Over a Demand Recovery Looming Over Market

    (Bloomberg) -- Oil fell as investors weighed stockpile declines against a darker outlook for demand and economic recovery.Futures in New York dropped 1.9% on Wednesday after the Energy Information Administration reported the lowest crude input by U.S. refineries since 2008 suggesting that demand recovery will take more time. Meanwhile, Federal Reserve Chair Jerome Powell presented a foreboding forecast for a U.S. economic rebound, saying the country faces unprecedented risks and may take some time to gain momentum.The drop came despite the EIA’s report that crude inventories fell by 745,000 barrels in the first decline since January.“The economic narrative is not a solid one or an improving one over the next couple of months, or the next few months,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management in Seattle. “There is probably a little more concern in the market that, yes, trends are heading in the right direction, but it may not be enough to overcome the lack of demand.”The extent of crude’s rebound has been mixed. Saudi Arabia and Russia said in a joint statement they see signs of a recovery in demand. However, OPEC cut its demand forecast for crude in the second quarter by about 15%, in a report published on Wednesday.In Europe, Germany aims to fully reopen its borders by the middle of June, but China is sealing off cities in a province that borders North Korea amid a growing cluster of cases.While a fresh wave of virus cases would threaten a fragile recovery, there are some bright spots emerging in the physical oil market. Chinese refiners have bought Brazil’s Lula crude at a premium to the global Brent benchmark versus a discount of about $6 a barrel a few weeks ago, while Russia’s Urals crude hit a nine-month high on Tuesday.“The tug-of-war between OPEC-led cuts and virus anxieties will limit upside price potential,” said PVM Oil Associates analyst Stephen Brennock.The EIA also reported that supplies at key U.S. storage hub in Cushing, Oklahoma, fell by 3 million barrels last week. Additionally, the discount on crude for June delivery relative to July, a structure known as contango, is at its tightest since March, suggesting that concerns around brimming storage capacity are easing.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • HSBC lost $200 million in a day on paper as coronavirus dislocated gold market

    HSBC lost $200 million in a day on paper as coronavirus dislocated gold market

    The losses by HSBC, one of the world's biggest bullion trading banks, are theoretical, reflecting the value of positions it held. HSBC said in the filing that the issue was mainly due to an "unprecedented widening of the gold exchange-for-physical basis, reflecting Covid-19-related challenges in gold refining and transportation, which affected HSBC's gold leasing and financing business and other gold hedging activity". The exchange-for-physical, or EFP, is the difference between the price of U.S. gold futures and spot gold in the London market.

  • Reuters - UK Focus

    HSBC lost $200 mln in a day on paper as coronavirus dislocated gold market

    HSBC Holdings Plc suffered mark-to-market losses of about $200 million in a single day in March after gold prices in London and New York diverged dramatically, the bank said in a filing. The losses by HSBC, one of the world's biggest bullion trading banks, are theoretical, reflecting the value of positions it held. HSBC said in the filing that the issue was mainly due to an "unprecedented widening of the gold exchange-for-physical basis, reflecting Covid-19-related challenges in gold refining and transportation, which affected HSBC's gold leasing and financing business and other gold hedging activity".

  • Bloomberg

    HSBC Lost About $200 Million in One Day on Gold Market Turmoil

    (Bloomberg) -- HSBC Holdings Plc lost around $200 million in one day in March because of disruptions to the gold market that caused prices to diverge dramatically in key trading hubs, according to a filing by the bank.The one-day loss was unusually large for a market in which the leading banks -- which include HSBC and JPMorgan Chase & Co. -- typically hope to make around $200 million in an entire year. It far exceeded the maximum loss anticipated by HSBC’s value-at-risk models.HSBC’s loss highlights the extreme nature of the disruption to the gold market in late March, as lockdowns closed refineries and grounded planes, strangling the supply routes that allow physical bullion to move around the globe.The price of gold futures in New York and spot gold in London, which usually trade within a few dollars an ounce of one another, diverged by as much as $70 -- the most in four decades. The divergence hit banks that are active in trading the so-called EFP, or Exchange for Physical, the mechanism by which traders switch positions between the New York and London markets.HSBC, which had disclosed in a previous filing that it was hit by the gold market disruption, revealed the scale of the loss in a chart this week showing its daily trading profits for the first quarter.The bank described the loss as a “mark-to-market loss mainly associated with gold refining and transportation challenges.” It highlighted the “unprecedented widening of the gold exchange-for-physical basis,” which “affected HSBC’s gold leasing and financing business and other gold hedging activity leading to mark-to-market losses.”HSBC declined to comment.In the past week, the price difference between the New York and London markets has returned to more normal levels of less than $5 an ounce.Still, HSBC is not the only one struggling with the unusual moves in the gold market. Banks often sell gold futures in New York to hedge their positions in the London market, exposing them to significant losses should the two markets diverge.As a result, some banks have stepped back from trading the EFP in recent weeks. And Canada’s Bank of Nova Scotia, for years one of the leading bullion traders with a business that dates back to the 17th century, told staff in April it was shuttering its precious metals unit.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Reuters - UK Focus

    Shares of sensor maker AMS dive after proposes capital hike for Osram takeover

    Shares in AMS fell 10% on Wednesday after the sensor maker said it planned another capital increase to finance the Osram takeover. AMS, best known as a supplier for Apple's face recognition technology on iPhones, is in the process of buying the leading manufacturer of car headlamps for up to $5 billion to open up new sales channels for its sensors in the auto industry. To refund a 4.4 billion euro ($4.8 billion) bridge loan, provided by UBS, HSBC and Bank of America Merrill Lynch for the takeover, it already issued 190 million new shares with proceeds of 1.75 billion Swiss francs (1.7 billion euros).

  • Reuters - UK Focus

    Investment banks cut jobs despite coronavirus trading surge -Coalition

    Investments banks cut jobs at the fastest pace in six years during a first quarter in 2020 even though the coronavirus pandemic triggered a surge in volatility and boosted revenues to a five-year high, data published on Wednesday by research firm Coalition showed. While investment banks have benefited from the short-term increase in trading, they are expected to be hit hard by a global recession triggered by the COVID-19 crisis and have already imposed hiring freezes. Coalition's data showed that the banks' revenues from fixed income, currencies, and commodities had their strongest first quarter since 2015, surging 20% to 22.7 billion dollars, as the financial turmoil from the coronavirus crisis prompted a spike in trading.

  • Reuters - UK Focus

    Saudi Aramco closes $10 billion one-year loan -LPC

    Saudi Aramco has closed a $10 billion one-year loan provided by a group of 10 banks, LPC, a fixed income news service which is part of Refinitiv, reported. HSBC, Japan's SMBC and First Abu Dhabi Bank led the transaction, while BNP Paribas, Citi, Credit Agricole, JPMorgan, Mizuho, MUFG and Societe Generale also participated in the loan, LPC said. The loan, which has an opening margin of 50 basis points over Libor, has a one-year extension option at the lenders' discretion, LPC said, citing one banker.

  • Reuters - UK Focus

    Keep trading from the kitchen: UK bankers face months more of homeworking

    Many of the City of London's bankers and traders will be working from their kitchens or bedrooms for at least a year under some scenarios being planned by finance companies in Britain. Banks, insurance companies and asset managers have had to work remotely since the country locked down in March to fight the coronavirus pandemic. The radical shift from trading floors to people's homes has been deemed a big success in coping with record breaking volatility across financial markets.

  • COVID-19 pandemic could cost UK banks £25bn
    Yahoo Finance UK

    COVID-19 pandemic could cost UK banks £25bn

    Fitch Rating said the UK's five biggest banks would likely set aside billions of pound more to cover losses as the year progresses.

  • Reuters - UK Focus

    Singapore trader Zenrock Commodities placed under court-appointed supervisor -HSBC

    Singapore-based Zenrock Commodities Trading Pte Ltd has been placed under the management of a court-appointed supervisor following an application by HSBC Holdings, the bank told Reuters on Friday. "The Singapore High Court granted HSBC's application for the appointment of interim judicial managers (IJM) in relation to Zenrock," a spokeswoman from HSBC said in an emailed response to a query. Two sources with knowledge of the matter said executives from accounting firm KPMG have been appointed as IJMs of Zenrock.

  • HSBC alleges Zenrock sought multiple loans for same oil cargo - court document

    HSBC alleges Zenrock sought multiple loans for same oil cargo - court document

    HSBC Holdings PLC has alleged that Singapore-based Zenrock Commodities Trading Pte Ltd engaged in a series of "highly dishonest transactions" which included using the same oil cargo to obtain loans from at least two different lenders, according to a court document seen by Reuters. HSBC filed a court application on Monday to place Zenrock Commodities under judicial management, where a court appoints an independent manager to run the affairs of a financially distressed company in the place of existing management. "The Singapore High Court granted HSBC's application for the appointment of interim judicial managers (IJM) in relation to Zenrock," a spokeswoman from HSBC told Reuters.

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