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Research Market strategy
by Swissquote Analysts
Morning News

HSBC Looks to Unload French Retail Bank

Topic of the day

HSBC Holdings PLC is preparing to put its French retail bank on the sales block in one of its first strategic actions under new interim Chief Executive Noel Quinn, people familiar with the matter said. The potential disposal of the money-losing French unit is part of a longer-term effort to shed businesses where the bank lacks scale or strategic need, the people said. HSBC, one of the world’s largest banks by assets with a sprawling global footprint, since 2011 has exited more than 100 businesses and reduced the countries in which it operates from 87 to 65. A person familiar with the planned disposal said the likeliest buyer would be a French bank looking to add market share. HSBC France has around 300 branches and 800,000 customers, and 2% market share in retail deposits and lending. It isn’t clear what price it might fetch. European bank valuations have been depressed under the weight of slow growth and negative interest rates. HSBC will continue to offer wholesale banking in France, and Paris will remain its hub for investment banking and corporate banking business in the European Union if, as expected, Britain leaves the trading bloc. A formal sales process could start as soon as this fall. A spokeswoman said the bank doesn’t comment on speculation.

Swiss stocks

Hopes of progress in the US-China trade talks sent the SMI up 0.8 percent to 10,099 points Wednesday. China had published a list of US import products which would be exempted from punitive tariffs in preparation for a new round of talks in October. Traders were also hoping the European Central Bank would announce a new securities purchase programme (quantitative easing) at Thursday’s meeting. Geberit led the SMI, climbing 2.8 percent to CHF 478 after an analyst upgrade to “hold” from “sell” and target increase to CHF 430 from CHF 230. China-focused Richemont rose 2.4 percent and Swatch 2.3 percent. Recently maligned heavyweights Nestle rose 0.4 percent and Novartis 0.7 percent. Roche closed virtually unchanged. Bank stocks were again in demand on rising market yields. Credit Suisse gained 1.6 percent and UBS 1.3 percent. Among second-tier stocks, Schmolz & Bickenbach fell 8.1 percent after lowering its 2019 earnings forecast. Lalique slid 5 percent on poorly received half-year figures.

International markets

Europe

The Stoxx Europe 600 rose 0.8% in late-morning trade, with Germany's DAX up 0.7% and France's CAC 40 up 0.4%. Shares in the London Stock Exchange Group PLC gained 4.2% after Hong Kong Exchanges & Clearing Ltd. made an offer to buy it in a $36.56 billion cash-and-share deal. Meanwhile, shares in Prosus, the Naspers Ltd. spinoff, had their debut on Amsterdam's Euronext. A valuation of nearly EUR120 billion ($132.51 billion) made it Europe's largest listed consumer internet company. Zara-owner Industria de Diseno Textil SA, the world's largest fashion retailer by sales, saw its share price fall 2.6% after it reported earnings for the first half of the year. Investors have shown signs in recent days of expecting less stimulus from the European Central Bank when it meets on Thursday. "Ahead of the ECB meeting investors seemed to take some chips off the table with aggressive expectations being pared back," said a senior rates strategist at ING Bank in a note.

United States

Rallying technology shares drove U.S. stock indexes higher intraday, putting the Dow Jones Industrial Average on track to post its sixth consecutive session of gains. The blue-chip index climbed 138 points, or 0.5%, to 27048. The S&P 500 ticked up 0.4%, and the tech-heavy Nasdaq Composite advanced 0.8%. With not much economic data on the docket for Wednesday, analysts said they were looking ahead to central bank meetings in the coming days. Both the European Central Bank and Federal Reserve are expected to cut interest rates in September. Gains among technology shares helped push major indexes higher, with Apple extending a rally that began Tuesday after it unveiled a trio of new iPhones and monthly prices for its new video-streaming service. Shares of the phone maker were recently up 2.7%. Other technology stocks jumped as well, with Facebook , Micron Technology and Intel all rising at least 1%. Earnings-related news drove additional swings among individual stocks. Dave & Buster's Entertainment slid 4.6% after cutting its guidance. GameStop shed 11% after reporting a loss for the most-recent quarter and giving a downbeat forecast for the year.

Asia

Asian markets are broadly higher after President Trump said the U.S. will delay by two weeks a planned increase in tariffs on some Chinese imports. The South Korean stock market is closed today for a holiday.Japanese stocks were up, led by the machinery sector as fears somewhat eased about the U.S.-China trade war. Nikkei Stock Average was recently up 0.9% at 21787.48. Traders were waiting for further signs of easing in U.S.-China trade tensions before buying more aggressively.Hong Kong stocks quickly reversed opening gains, with the Hang Seng Index down 0.4% at 27048.32 after opening 0.5% higher.

Bonds

U.S. government-bond prices fell, on pace for a third consecutive session of declines, after a report showed producer prices unexpectedly rose last month. The yield on the benchmark 10-year note rose to 1.733%, according to Tradeweb, compared with 1.706% Tuesday. The yield had reached a three-year low of 1.456% a week ago.

Analysis

Baader Helvea downgrades Dufry target to 106 (116) CHF - Buy
UBS upgrades Vestas to Buy (Neutral) - Target 585 DKK
IR raises Inditex target to 29 (27) EUR - Hold
Coba: LSE acquisition from Hong Kong unlikely - Reduce


Produced by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.

 
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