HSBC: Positive Trading Indications For Peer IBs, DCM Improving

HSBC headlines flowing as mgmt speak to BBG TV and HK conference; minor positive for trading indications around investment banking businesses.

• Firstly, mgmt are speaking at the company’s HK investment summit and making the usual statements highlighting HK’s role as offshore RMB centre, the strength of the HKDUSD peg and HK’s role in global finance. No price actions from this.
• More interestingly, CEO Noel Quinn is on BBG TV indicating “early signs of debt capital markets picking up”. DCM has been in better shape then ECM and M&A over the last year or so but still at subdued levels of activity. Any sense of improvements in these primary and deal-making businesses has a positive leveraged effect for the major investment banks, especially Morgan Stanley, Goldman, Deutsche, the other US majors (BoA, Citi and JPM) and Barclays.
• Finally, Quinn also stated the bank is “committed to wholesale banking in Europe, Germany”. After HSBC’s sale of most of its French business (what was CCF), there had been press speculation it could sell its German business (what was Trinkhaus & Burkhardt) which we feel the market would have taken as a minor positive, as it both simplifies the group and increases its gearing to growth markets in Asia. The high stakes poker game that is the process of selling a bank could mean this is a misdirection by Quinn, however.