HSBC, StanChart face risk from decelerating Asian economies: FT

"It is the very beginning of the downcycle in emerging markets for HSBC (HBC) and StanChart (SCDRF.OB), and the opposite for the rest of the UK banks," an analyst at Bernstein tells FT.

The two banks — whose post-crisis pre-tax profits were a combined $66B through 2011 — may now fall behind the curve as their exposure to Asia becomes a drag amid tighter credit conditions and an acceleration in sour debt.

Rising rates in the U.S. and other Western economies may reduce the incentive for investors to hunt for yield, exacerbating slowdowns in emerging markets.

HSBC may be better hedged given its U.S. businesses. As for StanChart, here's Bernstein's Chirantan Barua: "When you have naked exposure, you get the best of times and the worst of times."

See also: HSBC H1 results

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Comments (2)
  • Uncle Pie
    , contributor
    Comments (4322) | Send Message
    An analyst from Alliance Bernstein worried about HSBC and Standard Chartered? Alliance Bernstein's earnings have dropped each year for the past five, and the shares, or rather, units, have lost about 2/3rds of their value over that time. The benefit of being a global bank like HSBC is that when the tide is going out on one side of the world, it's coming in on the other. HSBC is among the top ten holdings of Norway's $700+ billion sovereign wealth fund. The list:
    Nestle, Royal Dutch Shell, HSBC, Novartis, Roche, Blackrock, Sanofi, Vodaphone, BP, Exxon.


    Long Nestle, Shell, HSBC, Novartis & Roche (just a coincidence)
    18 Aug 2013, 12:44 PM Reply Like
  • graham downunder
    , contributor
    Comments (240) | Send Message
    So sorry to hear that a bank like HSBC in your opinion faces trouble because of a slowdown in Asia . I think you may want to look at the Spanish banks and see how the last two years compare . Then look at their bad loan book and at what level they have written down the value of the properties they have mortgages on . Next look at the value they have placed on uncompleted/ unoccupied real estate development. Then have a look at what they accepted as a deposit in the last 10 years . Generally you will find it was less than 20% , you will see than any equity borrowers had has long ago evaporated ,the banks just cannot absorb anymore bad losses so they are not repose sing crystallising their losses. To do so would bring to light the the enormous amount of losses far exceeding provisions ,and one their government cannot bail them out of. HSBC on the other hand has a very long history of good management particularly in Asia and they even called the problem in the US real estate market about two years before it imploded.Funny you should have a look at the Basil 3 Requirements and see how other banks in Europe compare to HSBC . Then consider what future in any have Greece, Spain , Portugal, and Cyprus banks as the economies in those countries continue to slowly collapse. Soon the huge number of unemployed will leave to go to other countries like after world war 2 , and the result will be even less demand for real estate and less foreign investment within these countries .
    19 Aug 2013, 12:46 AM Reply Like
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