HSBC Plunges and Virus Woes

Second wave fears and a bomBshell banking report drag on FTSE

Downtrend 3

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. 

Whilst it has been a while since the last banking sector scandal, it hasn’t been long enough. This is a sector which constantly appears to struggle to stay on the right side of regulators and the law. 

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.

Looking ahead
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.

FTSE Chart


More from FTSE 100

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.