An Asian Slowdown Could Complicate HSBC Restructure - Agency

Tom Burroughes

7 January 2020

Hong Kong/London-listed HSBC, whose profitability has already been blunted by weak European results as shown a few weeks ago, will be hit if its major Asian marketplace gets more challenging amid international trade tensions, according to growth forecasts in October 2019,” it said.

The note said that Hong Kong remains the most important contributor to HSBC’s performance; in the first nine months of 2019 it contributed 53 per cent of the group’s adjusted pre-tax profit, and together with the rest of Asia more than 80 per cent.

Hong Kong worries
During H1 2019 Hong Kong’s economic growth was “weak”, Morningstar DBRS said, and below the long-term trend due to weak private consumption growth and contraction in investment spending, reflecting low consumption and investment confidence.

“The intensification of social protests appears to have had an important impact on the economic performance. The economy also suffered from poor export performance, reflecting global trade tensions, notably the US-China trade dispute. We note that Hong Kong’s economy is highly dependent on trade with the rest of the world,” it continued.