HSBC Plunges and Virus Woes
Fiona Cincotta September 21, 2020 3:38 AM
Second wave fears and a bomBshell banking report drag on FTSE
European bourses are starting the week on the back foot with the FTSE leading the charge lower. Rising covid cases, fears of tighter lockdown restrictions and a bombshell report on bank’s suspicious transactions.
Tighter lockdown restrictions coming
There is a distinct lack of good news as the FTSE kicks off trading for the week. New daily covid infections continue to rise sharply. With large pats of the UK seeing tighter lockdown restrictions and fears growing that London could be next. British Medical Advisor Chris Whitty is due to make a public briefing later this morning where warnings that the UK is at a critical point ahead of a very challenging winter are likely to keep sentiment depressed.
Bank’s can’t stay out of trouble
British banks are back in the spotlight for all the wrong reasons. A report that some of the world’s largest banks enabled flows of dirty money in suspicious transactions over a period of two decades, despite warnings from regulators is keeping the sector out of favour. HSBC was one of the 5 global banks which appeared heavily in the report, along with Standard Chartered, JP Morgan Chase & Co, Deutsche Bank and Bank of New York Mellon Corp.
HSBC at 25 year low
Heavyweight HSBC is a standout loser as the global bank faces trouble on several fronts as it is caught up in political turmoil and an economic slump. In fact, things couldn’t get much worse for the bank which is reeling under covid pressures and its increasingly difficult position in no-mans land, supported by neither the East or the West.
Not only is the suspicious transaction report extremely damaging, but the bank is on the brink of being added to China’s “unreliable entity” list, potentially threatening its plans to expend into China.
The so-called unreliable entity list looks to punish firms that damage national security. Should HSBC find itself on the list the bank will experiencing problems expanding into mainland China after investing heavily in directing the business that way over the past few years.
The stock is trading at a 25-year low and the outlook is troubling at best.
The economic calendar is light in Europe and the US. US tech stocks will remain in focus, with fears of the selloff continuing despite progress in the TikTok WeChat saga.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.