By Swissquote Analysts
HSBC to Sell Canadian Arm for $10.1 Billion
Topic of the day
Royal Bank of Canada said it would pay US$10.1 billion for HSBC Holdings PLC's Canadian operations, a move meant to position Canada's biggest bank to expand during an expected immigration surge. HSBC, a London-based bank with a huge Hong Kong presence, serves more than 780,000 customers through 130 branches in Canada. As part of the deal, it will refer clients who are moving to Canada to RBC, said Dave McKay, RBC's chief executive. Canada's government has said it expects to boost immigration to 500,000 people a year by 2025, up from 405,000 last year. The HSBC deal, Mr. McKay said, isn't about acquiring loans or deposits as much as acquiring clients. The purchase, if approved by regulators, would be Canada's largest-ever domestic bank deal. HSBC said it was considering selling its Canadian operations in October. The unit has a small share of the Canadian market - accounting for just 2% of the country's deposits and mortgages - and doesn't fit into HSBC's planned shift toward Asia and the Middle East. HSBC will transfer almost $100 billion in assets to RBC when the deal closes, including Canadian retail, commercial and investment-banking businesses. U.S.-listed shares of HSBC Holdings rose $1.20, or 4.1%, to $30.48 after the bank agreed to sell its Canadian arm to Royal Bank of Canada for about $10 billion. HSBC shares were up 4.4% in London.
The Switzerland market ended on a weak note with stocks losing further ground in the final hour as selling gathered momentum. The benchmark SMI closed with a loss of 84.35 points or 0.76% at 11,077.81, less than a point off the day's low. Givaudan and Credit Suisse edged lower by about 3.7% and 3.6%, respectively. Lonza Group drifted down 2.8% and Sonova lost about 2%. Nestle, Sika and Geberit declined by nearly 2%. Partners Group slipped 1.4%, and Roche Holding finished lower by about 1%. Richemont climbed 2.26%. Swiss Re gained nearly 1%, while UBS Group and Swiss Life Holding ended modestly higher. Data released by the State Secretariat for Economic Affairs, showed that, compared to the same quarter last year, growth in GDP eased notably to 0.5% from 2.2%. Yet, growth was expected to moderate to 1% in the third quarter. Driven by the spending on housing and energy and leisure and travel, household consumption grew 0.7% despite a relatively high inflation. Nonetheless, the growth rate was slower than the 1.3% rise a quarter ago. Exports of goods rebounded 7.8% following a 13.5% decrease, the data showed. Meanwhile, growth in exports of services slowed to 2% from 6.6%. At the same time, imports of goods climbed 3%, reversing a 0.7% drop, and imports of services gained at a faster pace of 7.8% after rising 3.3%.
European stocks closed on a mixed note on Tuesday after swinging between gains and losses in cautious trade as investors reacted to Covid-related news from China and the latest batch of European economic data, while contemplating crucial data, including the monthly jobs report, from the U.S., due later in the week. The Stoxx Europe 600 index fell 0.1% to 437.3 points. In Paris, the CAC 40 gained 0.1% while the SBF 120 was unchanged. The DAX 40 in Frankfurt dropped 0.2% on Tuesday, while the FTSE 100 in London rose 0.5%. Car rental specialist ALD (-1.5%) announced a €1.2bn capital increase to finance the acquisition of Dutch rival LeasePlan. Solvay dropped 2.3% to EUR 94.14 after Credit Suisse downgraded its recommendation on the stock by two notches to "underperform" from "outperform" and lowered its target price to EUR 87 from EUR 119. EasyJet (-2.6% in London) on Tuesday reported a narrower pre-tax loss and improved revenue for the 2021-2022 financial year as passenger numbers and revenue per seat recovered after Covid-19 restrictions were eased. The low-cost carrier also revealed positive booking trends for early 2023. Juventus Football Club shares slipped 1% in Milan after all members of the Italian football club's board of directors, including its chairman Andrea Agnelli, resigned on Monday evening. The Italian judiciary has been investigating Juventus' accounting practices in connection with player sales and trades for more than a year. To date, the company has always denied any wrongdoing.
U.S. stocks closed mostly lower Tuesday as investors eyed protests in China and pondered what Federal Reserve Chairman Jerome Powell might say in a coming speech. The S&P 500 slipped 6.31 points, or 0.2%, to 3957.63 and the Nasdaq Composite lost 65.72 points, or 0.6%, to 10983.78. The Dow Jones Industrial Average added 3.07 points, or 0.01%, to 33852.53. Stock buyers also got a look at two U.S. economic reports on Tuesday. The S&P CoreLogic Case-Shiller National Home Price Index fell in September from the month prior, its third consecutive drop and a sign that rising interest rates are making would-be home buyers think twice. Also, the Conference Board’s consumer-confidence index fell in November for the second consecutive month. The decline suggests the economy is losing momentum, the Conference Board said. In corporate news, shares of United Parcel Service rose $4.98, or 2.8%, to $184.89. The company would likely be affected by any potential strike by rail-worker unions. In Washington, the Biden administration called on Congress to pass legislation that would avert a rail shutdown. Shares of AMC Networks fell $1.10, or 5.3%, to $19.48 after Chief Executive Christina Spade stepped down from the role after less than three months. The entertainment company said its board is finishing work to name a replacement.
In Asia, major indexes broadly closed with slight gains in the middle of the week. China’s benchmark Shanghai Composite edged up 0.2 per cent , while Hong Kong’s Hang Seng added 0.2 per cent. Japan’s Nikkei 225 index however shed 0.3 per cent. South Korea’s Kospi rose 0.9 per cent. Among individual stocks, Bilibili in Hong Kong increased by 8.5 per cent after the video-sharing company reported a smaller than expected net loss for the third quarter.
Long-dated U.S. government debt yields U.S. bond yields advanced on Tuesday, as traders assessed hawkish rhetoric from the Federal Reserve. The 10-year Treasury note rose by 6 basis points to 3.761%. while the 2-year Treasury note advanced by 5 basis points to 4.488%. Normally, longer-term bonds have higher yields. Nevertheless currently, the yield on the 10-year note is further below the two-year yield than at any time in decades. Such a so-called inverted yield curve is often seen as a red flag that a recession is looming.
Baader cuts Huber+Suhner to Add (Buy) - Target CHF 100 (95)
UBS reduces Kardex target to CHF 184 (192) - Buy
CS lowers Solvay to Underperform (Outperform) - Target EUR 87 (119)
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