HSBC; Equity Falling On Downgrade And Small(er) Buyback, Should Be Spread Neutral

HSBC (HSBA LN) - a couple of points after the (mainly equity) conf call where the questioning largely covered three topics and underpinned our “spread neutral” view from earlier.

• Revenues: there is clearly some fear about the rate of slowdown in this line as both rate tailwinds subside but also as activity slows more widely across HSBC’s geographies. Our sense is that there’s a downgrade to earnings estimates here.
• Capital return: a key trend for the equity community right and interesting that few people questioned the quantum of the overall buyback. Our assumption is that is partly driving the equity drop today but does indicate some support for spreads.
• China and real estate: almost no questioning at all. Instructive that the equity community is so relaxed on this, taking the view that HSBC is relatively well placed. So that would be mildly positive for spreads and good for StanChart, we feel.