HSBC, Standard Chartered shares trade near two-year highs as investors bet on further interest rate rises to boost margins

Name: HSBC doubles down on Asia in massive staffing overhaul
Uploaded: 2022-02-08T03:55:47.000Z
Duration: 4 min 41 s
Description: HSBC doubles down on Asia in massive staffing overhaul

Bank shares have moved up sharply since December as central banks signal additional interest-rate increases as inflation spikes in Western economies

HSBC, Standard Chartered shares were hit hard in 2020 by restrictions on investor payout

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Standard Chartered and HSBC’s main buildings in Central. Photo: Nora Tam

Chad Bray

Published: 11:55am, 8 Feb 2022Updated: 1:02pm, 8 Feb 2022

UK lenders HSBC and Standard Chartered, which derive most of their profits in Asia, are trading near two-year highs in Hong Kong, as investors bet higher interest rates globally will bolster their bottom lines.

Both lenders, alongside their industry peers, have seen their shares advance since the start of the new year as it became clearer that central banks, from the Federal Reserve to the Bank of England, would need to increase their policy rates to address a rapid rise in inflation.

The rapid growth of Western economies as they recover from the coronavirus pandemic, alongside higher fuel costs, have contributed to rising costs of living. Recent government reports showed prices climbed the most in nearly 40 years in the US and by nearly three decades in the UK.

HSBC has gained about 25 per cent since the end of December to HK$58.80 at midday on Tuesday, while Standard Chartered advanced 28 per cent in the same period to HK$59.60. Analysts have raised their price targets by 14 and 9 per cent respectively since August, according to Bloomberg data, when they resumed dividend payments.

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HSBC doubles down on Asia in massive staffing overhaul

“It looks like central banks around the world are getting more hawkish to raise interest rates on high inflation,” Citigroup analyst Yafei Tian said in a research note. “For this year, the US is forecast to lead with the number of rate hikes. Hence we are constructive on Hong Kong banks’ margin expansion potential.”