HSBC the Future

[Dod101]

I have been thinking a lot about the future for HSBC since the announcement of John Flint's sudden departure and it would not surprise me if we are in for a decent period of good results, maybe even a decade considering that Mark Tucker the Chairman has said it may take a year to find a new CEO.

Tucker must know Asia very well as he has spent a long and successful time there as CEO of first Prudential Asia and then AIA. HSBC's weak link is the US, and it may be that they will find a US CEO to try to correct this. Stuart Gulliver spent about ten years sorting out the Group and Flint was supposed to be coming in to take advantage of that but evidently without the vision or speed that Tucker wants. The scene reminds me of the situation with Sir William Purves back during the last decade of the 20th century when HSBC had a most spectacular run. That ended when John Bond, Purves' successor, went on a spending spree and crucially bought Household in the US amongst many other companies in a bid to be a world wide bank. It was these problems that Gulliver spent his time sorting out.

Now that these are largely sorted, I think the stage could be set for success. HSBC is very well capitalized, has undoubtedly got connections with all those that matter and depth of management. (Too deep some would say, resulting in a rather bloated civil service attitude) These things go in cycles and it would not surprise me if at last HSBC's time has came again.

We'll see. I am hanging on to my shares anyway, the only bank I hold.

Dod

[idpickering]

I hope you’re right Dod. As I mentioned elsewhere, I hold these alongside Lloyd’s. I’m happy to continue holding both, but as I can’t tell the future, here’s hoping that both will come good, particularly on the dividend front.

Ian.

[MDW1954]

There's an excellent article in this week's Economist, which is broadly very positive on HSBC and Mark Tucker. It's behind a paywall, so I won't link to it, but for those with Economist access, well worth a read.

(It could be that the Economist allows a set number of free reads, of course -- I don't know.)

MDW1954

[YeeWo]

Now that these are largely sorted, I think the stage could be set for success. HSBC is very well capitalized, has undoubtedly got connections with all those that matter

On the basis that CCP and their-stooges are literally knocking-lumps out of anybody with a mind of their own on the streets of Hongkong as I type, it does make me wonder. Hongkong is Key to HSBC's overall profitability and clearly the complexion of the SAR is changing at a frighteningly rapid pace. If Hongkong's special-status in Washington is revoked that would be an awful blow, if (big-gulp) the HKD/USD Peg is ever removed and the CNY were to become freely convertible Hongkong really would cease to have any reason to exist.

and depth of management. (Too deep some would say, resulting in a rather bloated civil service attitude) These things go in cycles and it would not surprise me if at last HSBC's time has came again. We'll see. I am hanging on to my shares anyway, the only bank I hold. Dod

The rapid departure of Mr Flint was the clearest indication that the IM Cadre long-term culture is broken. I was genuinely shocked that he left so suddenly, the results seemed fair to me. I'm certainly not-selling HSBC, but I can't be a Bull either!

There's an excellent article in this week's Economist, which is broadly very positive on HSBC and Mark Tucker. MDW1954

I didn't perceive said-article to be "very positive", I thought it was an excellent article insofar as it outlined the problems HSBC has. £1.2bn LOSS in the UK, Sub-scale in many-markets, physical retail being expensive and at threat of tech-disintermediation, being positioned for Global Trade flows as Trump & CCP face-off against each other. 1990's Globalisation does seem to be politically totally out of vogue, HSBC was very well positioned in that-era, things seem very different today.
Disc : As of 09 Aug 19 HSBC is 3.8% and StanChart is 3.9% of my overall portfolio.

[SalvorHardin]

There's an excellent article in this week's Economist, which is broadly very positive on HSBC and Mark Tucker. It's behind a paywall, so I won't link to it, but for those with Economist access, well worth a read.

(It could be that the Economist allows a set number of free reads, of course -- I don't know.)

I believe that it is five free reads per month (I subscribe to The Economist, but logged out to test this and it seems to be five articles)

Mark Tucker replaces John Flint
https://www.economist.com/finance-and-e ... -executive

Chinese troops must stay off the streets of Hong Kong (lead article)
https://www.economist.com/leaders/2019/ ... -hong-kong

[Dod101]

There's an excellent article in this week's Economist, which is broadly very positive on HSBC and Mark Tucker. It's behind a paywall, so I won't link to it, but for those with Economist access, well worth a read.

(It could be that the Economist allows a set number of free reads, of course -- I don't know.)

MDW1954

Thanks MDW., I will get hold of that even if it means buying the mag. I am also positive on HSBC although I am of course very mindful of what YeeWo is saying. I keep fairly closely in touch with expats and locals in HK.

Dod

[Dod101]

There's an excellent article in this week's Economist, which is broadly very positive on HSBC and Mark Tucker. It's behind a paywall, so I won't link to it, but for those with Economist access, well worth a read.

(It could be that the Economist allows a set number of free reads, of course -- I don't know.)

I believe that it is five free reads per month (I subscribe to The Economist, but logged out to test this and it seems to be five articles)

Mark Tucker replaces John Flint
https://www.economist.com/finance-and-e ... -executive

Chinese troops must stay off the streets of Hong Kong (lead article)
https://www.economist.com/leaders/2019/ ... -hong-kong

Thanks for these links SalvorHardin. The link on the politics is rather better than the one on HSBC I think. Probably like Mr Tucker, I am assuming that the HK situation will work itself out when I express my optimism about HSBC but given that then I think it is well set for the immediate future.

Dod

[Steveam]

HSBC went through a near death experience over the Mexican drug laundering and a further very difficult regulatory period because of the leaked Swiss tax list. I think as a result of these experiences they’ve become a bit frightened and defensive rather than outlooking and strategic. Perhaps this was the right response but now they need to be looking forward and make some tough decisions about who they really are and what they want to become.

And an article from MoneyWeek:

https://moneyweek.com/512610/hsbc-is-at-a-crossroads/

Best wishes,

Steve

[Dod101]

I agree very much with Moneyweek's analysis, and I have little doubt that it will choose the right path because Ticker has got a very good reputation and I think he sees a bank which has everything it needs but has now got to get on with it. Of course part of the reason for the stagnating share price is simply that the dividend is frozen but there has been no real growth to support any increase in the dividend. It should not be languishing on a yield of over 6%. It should be more like Unilever with a yield of more like half of that.

Watch this space!

Dod

[monabri]

https://www.telegraph.co.uk/business/20 ... -exit/amp/

A short article in The Telegraph today - it's locked so I'll extract some snippets

- HSBC’S biggest shareholders are divided over the bank’s next steps after ousting chief executive John Flint.

- Two top 15 investors told The Daily Telegraph that they want to see a wider boardroom reshuffle amid fears nobody on the current board will challenge chairman Mark Tucker.

“With the exception of Tucker they are a pretty dull bunch ( ) and Tucker will dominate,” said one investor.

- Another major shareholder agreed that stronger characters need to come into the fold.

- However, not everyone agrees that there needs to be a board overhaul. A third large investor said they see no need for a rejig provided there are signs of progress while a fourth argued there is no evidence the current board can’t stand up to the chairman.


p.s. I added the emoticon....!

[idpickering]

https://www.telegraph.co.uk/business/2019/08/12/investors-divided-hsbc-board-flint-exit/amp/

A short article in The Telegraph today - it's locked so I'll extract some snippets

- HSBC’S biggest shareholders are divided over the bank’s next steps after ousting chief executive John Flint.

- Two top 15 investors told The Daily Telegraph that they want to see a wider boardroom reshuffle amid fears nobody on the current board will challenge chairman Mark Tucker.

“With the exception of Tucker they are a pretty dull bunch ( ) and Tucker will dominate,” said one investor.

- Another major shareholder agreed that stronger characters need to come into the fold.

- However, not everyone agrees that there needs to be a board overhaul. A third large investor said they see no need for a rejig provided there are signs of progress while a fourth argued there is no evidence the current board can’t stand up to the chairman.


p.s. I added the emoticon....!

I'm not looking for miracles, but I'd be happy with just a 'steady as she goes' attitude from the board, and the company as a whole. I don't think HYP shares need to be exciting. Boring is good IMHO.

Ian.

[Dod101]

HSBC has always had strong chairmen. the last really successful one was Purvis and he practically ran it single handed although it was lot simpler I guess at that time. Since him, they have had John Bond, Stephen Green and Douglas Flint, none especially strong I think so I have no concerns about a strong Chairman. Of course we need a Board which will probe and so on but that is just good governance

Dod

[monabri]

[

Boring is good IMHO.

Ian.

Boring IS good!

[moorfield]

I've just noticed my Santander prefs (SAN) and HSBA yield the same tonight - 6.4%. An opportune moment perhaps to exit the prefs, which of course will not grow their dividend, for more HSBA.

[Alaric]

An opportune moment perhaps to exit the prefs, which of course will not grow their dividend, for more HSBA.

They are surprisingly comparable and HSBC haven't increased their dividend (in dollar terms) either. Market risk in both. So a bank Pref versus a Bank ordinary which in income terms is giving pref like returns.

According to the dividend data site, HSBC Holdings is the largest capitalisation in the FTSE if you don't treat Royal Dutch Shell A and B as being the same. It's going to have some effect on the FTSE 100 yield, now at a relatively massive by historic standards 4.67%.

[monabri]

Current yield is quoted as 6.91 % on Dividenddata.

https://www.dividenddata.co.uk/dividend ... ?epic=HSBA

[idpickering]

Current yield is quoted as 6.91 % on Dividenddata.

https://www.dividenddata.co.uk/dividend ... ?epic=HSBA

Imho they’re a very strong HYP buy. Unfortunately I have a full holding already, or I would be putting more money where my mouth is.

Ian.

[moorfield]

Imho they’re a very strong HYP buy. Unfortunately I have a full holding already, or I would be putting more money where my mouth is.

Rules are made to be broken, aren't they? Do a "what if" experiment and see how your portfolio would look after buying more... If you are "building" rather than "spending" then you will offset the (im)balance over time buying elsewhere.

[idpickering]

Imho they’re a very strong HYP buy. Unfortunately I have a full holding already, or I would be putting more money where my mouth is.

Rules are made to be broken, aren't they? Do a "what if" experiment and see how your portfolio would look after buying more... If you are "building" rather than "spending" then you will offset the (im)balance over time buying elsewhere.

I do get where you're coming from moorfield, thank you. Nowadays, I only have the incoming dividends to invest each month, I'm not working any more. We don't need the dividends as income currently. Back to HSBC, I do think they're the best HYP bet in the banking sector, so I might just do as you suggest. I do regard HSBC as a mainstay in my HYP, but I'd rather buy shares with an increasing dividend preferably. The bottom line, they're a solid base for an HYP imho.

Ian.

[Arborbridge]

Imho they’re a very strong HYP buy. Unfortunately I have a full holding already, or I would be putting more money where my mouth is.

Rules are made to be broken, aren't they? Do a "what if" experiment and see how your portfolio would look after buying more... If you are "building" rather than "spending" then you will offset the (im)balance over time buying elsewhere.

I do get where you're coming from moorfield, thank you. Nowadays, I only have the incoming dividends to invest each month, I'm not working any more. We don't need the dividends as income currently. Back to HSBC, I do think they're the best HYP bet in the banking sector, so I might just do as you suggest. I do regard HSBC as a mainstay in my HYP, but I'd rather buy shares with an increasing dividend preferably. The bottom line, they're a solid base for an HYP imho.

Ian.

I'm spending, not building - I don't think it makes any difference to Moorfield's suggestion. I find one advantage of the HYPTUSS spreadsheet is that I can do exactly as he suggests - pop in a projected new number of shares and see how it effects the overall picture. It's useful to do "what ifs" for such occasions, and if one is not spending but re-investing dividends, I would have thought even more useful.