By Swissquote Analysts
HSBC Pledges to Restore Pre-Covid Dividends as Profit Jumps
Topic of the day
Global banking giant HSBC Holdings PLC said it would resume paying full dividends to investors as early as next year and warned that its top shareholder’s push to split up the company would jeopardize profit and growth. Profit at the London-based lender rose 62% in the second quarter from a year earlier to $5.5 billion, the company said Monday. The bank said it received a boost from rising interest rates worldwide, which have increased the money the bank earns on loans to businesses and consumers. Executives said they strongly opposed a push by Ping An Insurance (Group) Co. of China—the company’s largest shareholder—to potentially split off the company’s Asian operations from its other businesses around the world. Such a move would undermine the bank’s goal of being an international bank that connects global regions and limits costs by avoiding duplicate tasks. “We just really struggle to come up with any form of value case that we could put in front of shareholders,” Chief Financial Officer Ewen Stevenson said Monday, pointing to the costs and complexities of separating HSBC’s Asia business, including tax impacts, losing group purchasing power and a significant risk to the rest of the group derating. In a slide presentation to investors, the bank circled the words “world” and “international finance partner” on the first page. “The board firmly believes that as these results clearly demonstrate, HSBC’s strategy is working,” Chairman Mark Tucker told investors in Hong Kong. Chief Executive Noel Quinn said the bank’s current strategy is the safest and fastest route to generate more dividends and returns, pushing back against calls for an Asia spinoff.
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Strong figures from US technology companies boosted shares in Switzerland on Friday. The leading SMI index was held back by the two pharmaceutical giants Roche (-2.7%) and Novartis (-1.8%). The SMI gained 0.1 per cent to 11,146 points. Among the 20 SMI stocks, there were 16 price gainers and four price losers. 43.45 (previously: 40.83) million shares were traded. Switzerland has a long holiday weekend ahead. Trading on the Swiss stock exchange will be suspended on Monday for the bank holidays. Swiss Re posted a drop in profits for the first half of the year, due to lower investment results and provisions for the impact of the Ukraine war. The Zurich-based reinsurer reported net income of $157 million for the six months ended June, down from $1.05 billion in the same period last year.
European equity indices closed lower on Monday as slowing manufacturing activity in China and the United States pointed to weakening global demand. The Stoxx Europe 600 index fell 0.2% to 437.5 points. In Paris, the CAC 40 and SBF 120 also fell 0.2 percent. The DAX 40 in Frankfurt ended flat, while the FTSE 100 in London gave up 0.1%. Heineken NV said Monday that net profit for the first half rose on the back of action to mitigate inflationary pressures on its cost base, and that it affirmed its forecast for 2022 and changed its guidance for 2023. The Dutch brewer said that it expects significant cost pressures and ongoing investment to affect the second-half of 2022 and into 2023, noting that the commodities price softening is being offset by higher natural price levels and availability. “Our pricing and revenue management actions have effectively offset these inflationary pressures so far in absolute terms, and we remain committed to continuing to do so,” the company said. Ferrari NV has been making luxury sports cars in the same factory in northern Italy for 75 years. The company’s hometown, Maranello, holds almost mythical status for motorheads, and is a pilgrimage destination for Ferrari owners and aspirational owners who arrive by the thousands every year. Now this paragon of tradition, style, quality and luxury is facing perhaps its biggest challenge ever: the shift to fully electric models.
U.S. stocks closed slightly lower Monday to start a new month of trading after finishing July with their best month since 2020. Major indexes spent much of Monday's session flitting between gains and losses before falling in the afternoon. The S&P 500 fell 11.66 points, or 0.3%, to 4118.63. The Dow Jones Industrial Average shed 46.73 points, or 0.1%, to finish at 32798.40. The technology-focused Nasdaq Composite Index lost 21.71, or 0.2%, to 12368.98. U.S. stocks mounted a furious recovery in recent weeks, boosted by positive signals from earnings and expectations that the Federal Reserve may not need to raise interest rates as aggressively as once thought, spurring a rally in government bonds alongside stocks. Investors' expectations for a less aggressive Fed have been evident in federal-funds futures, which are used by traders to place bets on the course of interest rates. Such futures on Monday morning showed a nearly 69% probability that the Fed will raise its key interest rate by half a percentage point in September, up from just 44% last week, according to CME Group. They also are assigning a smaller Among individual companies, Boeing gained $9.76, or 6.1%, to $169.07 after the plane maker temporarily avoided a strike at three defense manufacturing plants and cleared a regulatory hurdle for resuming deliveries of its 787 Dreamliner. American depositary shares of Alibaba moved added 97 cents, or 1.1%, to $90.34 after the company said it would work to stay listed on the New York Stock Exchange. The Securities and Exchange Commission on Friday added Alibaba to a list of Chinese companies at risk of being delisted from the U.S. exchanges if their auditors can't be inspected before spring 2024. Shares of EVO Payments increased $6.37, or 23%, to $33.71 after Global Payments said it would buy the payments-technology company and pay $34 a share in an all-cash deal. Global Payments shares rose $5.66, or 4.6%, to $127.98.
Negative signs dominate the stock markets in East Asia and Australia on Tuesday. Continuing economic worries after the latest weak economic data from China and the USA are dampening the mood. Traders also reported nervousness about the risk of escalating geopolitical tensions: US House of Representatives Speaker Nancy Pelosi is currently on a tour of several countries in the region and may also visit Taiwan. Observers fear that this would further strain the already tense relations between the US and China.
The US yield on the two-year Treasury note, meanwhile, traded at 2.909%, compared with 2.897% Friday, to keep the so-called yield curve inverted. That market signal, which occurs when short-term Treasury yields trade higher than long-term yields, is often seen as a key predictor of a recession.
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BoA raises the Engie target to EUR 19 (18) - Buy
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