Perlie Mong, an analyst from Bank of America Securities, maintained the Hold rating on HSBC Holdings. The associated price target was raised to p1,120.00.
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Perlie Mong’s rating is based on a combination of factors surrounding HSBC Holdings’ strategic moves and financial implications. HSBC’s proposal to privatize Hang Seng Bank is a significant investment in Hong Kong, reflecting the company’s confidence in the region’s future as a financial hub. This move is expected to simplify HSBC’s operations in Hong Kong and align economic incentives, potentially leading to efficiency gains.
However, the financial impact of this privatization is notable, with an expected initial capital impact of 125 basis points on HSBC’s CET1 ratio. The company plans to restore its capital ratio to its target range by relying on organic capital generation and pausing share buybacks for three quarters. While the proposal does not significantly alter earnings per share estimates for the coming years, the lack of immediate buybacks and the capital impact contribute to the Hold rating, suggesting a cautious approach to the stock’s potential performance.
In another report released yesterday, UBS also maintained a Hold rating on the stock with a £9.80 price target.