U.S. Housing Weakness Hits HSBC

HSBC provided investors with a year-end trading update, but its warning of slower revenue growth "attributable largely" to weakness in the U.S. housing market (and in its trading arm), did not bring out the holiday spirit in investors. HSBC's shares listed in Hong Kong lost 1.73% to close at HK$142.10. HSBC forecasts further near-term risk in its U.S. lending portfolio stemming from higher short-term interest rates having resulted in an increase in delinquencies and an unfavorable housing market, which could in turn affect consumption and employment. HSBC said its growth in Asia, including Hong Kong, "continues to offer the strongest growth prospects ... in the near term, together with the resource rich economies of Latin America and the Middle East ..." thanks to sustained strength in China's economy. Bloomberg notes HSBC's chairman seeks to grow business in Asia to offset its exposure to North America and the U.K., where it makes nearly half its profit.
• Sources: Press release, Bloomberg
• Related commentary: HSBC Struggles Against Global I-banks
• Potentially impacted stocks and ETFs: HSBC (HBC). Competitors: Citigroup (C), Goldman Sachs (GS). ETFs: iShares S&P Global Financials (IXG), BLDRS Europe 100 ADR Index (ADRU), BLDRS Developed Markets 100 ADR Index (ADRD), streetTRACKS DJ Global Titans (DGT)

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