HSBC shares slump after profit plunge
03-03-2009
HSBC has suffered its biggest daily fall since 1987 - shedding nearly a fifth of its value and losing around US$17 billion in market capitalisation. The share price ended down 18.8 percent at HK$46.25 after opening at its lowest level since the 1998 Asian financial crisis - matching a similar sell-off in its London-listed stocks. HSBC announced a US$17.7-billion rights issue at a deep discount and slashed its annual dividend yesterday. "I'm still bearish on HSBC. In 2009 we see a major risk for its European business," said Patrick Shum, strategist with Karl Thomson Securities. "The stock has already been oversold in the short term but the resistance at HK$49 is strong, so there is little room for a rebound." Bank of America-Merrill Lynch said in a research report it has cut HSBC's target price to HK$42.91, while keeping an underperform rating. The report said the planned capital raising had eased some of the concern over the bank's cash needs, but the outlook remained thorny on "the considerable macro headwinds facing the group's operations and uncertainty surrounding asset quality" in Britain and the United States. HSBC's local unit, Hang Seng Bank fell 3.5 percent to HK$81.30 following a disappointing 46 percent drop in second half earnings. The Hang Seng Index closed 2.3 percent lower.
