Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com - HSBC Holdings (NYSE:HSBC) stock, currently trading at $67.33 with a market capitalization of $230 billion, was downgraded by Jefferies from Buy to Hold with a price target raised to GBP11.20 from GBP9.60, citing limited upside potential following the removal of planned share buybacks.
The investment bank specifically noted the cancellation of $8.5 billion in share buybacks that had been scheduled from the third quarter of 2025 through the first quarter of 2026, which significantly impacts the stock’s growth prospects. This news comes despite HSBC’s impressive YTD return of 42.67% and strong six-month performance of 41.93%.
Despite the downgrade, Jefferies acknowledged HSBC’s attractive 17% Return on Tangible Equity (ROTE) prospects and noted the potential for a modest re-rating from the current 1.4x terminal Tangible Book Value (TBV) multiple to 1.6x.
The firm’s analysis shows HSBC’s expected shareholder remuneration of $60 billion for 2025-27 represents approximately 25% of the bank’s current market capitalization, indicating capital return prospects remain attractive despite the buyback reduction.
Jefferies indicated it would consider upgrading HSBC again if sizable buybacks were restored in the near term or if HSBC’s business became meaningfully accretive to group earnings per share, concluding that the risk/reward profile remains "asymmetric to the upside."
In other recent news, HSBC has announced an upward revision of its forecasts for 10-year German Bund yields, projecting them to reach 2.70% by the end of 2025 and 2.85% by the end of 2026. This change reflects HSBC’s updated expectations regarding the European Central Bank’s monetary policy, suggesting a more hawkish stance than previously anticipated. Additionally, HSBC Bank plc has revealed plans to delist its Zero Coupon Callable Accreting Notes from the New York Stock Exchange and seek a listing on Euronext Dublin. The primary reason for this move is to simplify reporting obligations and is part of a broader strategy to end its U.S. debt securities issuance program. Meanwhile, the Bank of England has requested some lenders to test their resilience against potential U.S. dollar shocks. This request comes amid concerns about policies from the Trump administration, which are perceived to be affecting confidence in the U.S. dollar’s role in global finance. These developments highlight significant strategic and financial adjustments by major financial institutions.
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