HSBC Shares Slide Further as Dividend Cuts Unsettle Investors
April 02 2020 - 1:33AM
Dow Jones News
By Martin Mou
HSBC Holdings PLC's shares continued to slide on Thursday
morning, a day after it said it would scrap its dividend in
response to a request from the Bank of England.
HSBC's Hong Kong shares were 3.0% lower at the midday break,
extending their losing streak to a sixth session and taking
year-to-date losses to 36%. The bank's shares in both Hong Kong and
London tumbled 9.5% on Wednesday.
Fitch Ratings on Thursday downgraded HSBC's outlook to negative
from neutral, saying the London-based bank's asset quality and
earnings face pressure from lower business volumes and higher
loan-impairment costs. Fitch expects the U.K. economy to shrink 4%
this year on virus-induced damages.
Britain's largest banks, including HSBC and Standard Chartered,
this week agreed to cancel 2019 dividends at the request of the
Bank of England, a move aimed at shoring up their capital buffers
against economic shocks stemming from the coronavirus pandemic.
Retail and other investors own shares of U.K. banks for their
yield, most notably HSBC, Citi said in a research note, adding that
the dividend cuts risks resulting in further underperformance by
British banks in the near term relative to U.K. insurers and global
banks.
Banks worldwide have been stepping up efforts to provide
liquidity to businesses and households as the coronavirus pandemic
slashes business revenue and household income.
Earlier this month, the biggest U.S. banks put share buybacks on
hold and pledged to free up their capital to help consumers and
businesses struggling with the rapid economic slowdown caused by
the pandemic. Other banks in Europe have canceled or delayed
dividend payments amid concerns about their ability to absorb a
potential rush of bad loans.
Write to Martin Mou at martin.mou@wsj.com
(END) Dow Jones Newswires
April 02, 2020 01:18 ET (05:18 GMT)
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