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HSBC insiders buy into mini-rally

Ewen Stevenson and James Forese have several new reasons to feel bullish
HSBC insiders buy into mini-rally
  • CFO purchases are followed by $0.5m share purchase by non-exec
  • Director dealings follow improving sentiment toward the bank
IC TIP: Hold at 335p

In the past month, the share price of HSBC (HSBA) has changed trajectory. At 335p, the stock is now up 19 per cent on September's multi-decade low, compared to a rise of less than 2 per cent for Asia-focused rival Standard Chartered (STAN).

Talk of a recovery is probably a bit rich, given the lender’s market value is up from just 0.37 to 0.44 times’ net assets. Indeed, the 43 per cent drop in the stock this year spells out the broader disaster for shareholders.

But sentiment has nonetheless improved. Falling impairments, rising capital levels, and an improving economic outlook meant third-quarter results were better than many had expected at the start of the period.

The reliance on Hong Kong and Greater China – which until recently seemed a geopolitical millstone around the neck – now looks like an asset. Asia accounted for all the group-level profits in the period, and should help the bid to re-commence dividends.

Closer to home, a warning around looming possible charges for UK current accounts generated headlines, but high street peers NatWest and Lloyds look more exposed to the threat of negative rates.

Against this backdrop, it was no surprise to see chief financial officer Ewen Stevenson acquire £118,746-worth of ordinary shares this week. He was followed by non-executive director James Forese, who spent $482,466 (£373,718) on American Depository Shares, each of which is worth five ordinary shares.

After all, the rating still looks cheap for a bank focused on geographies which are better equipped to contain the pandemic and offer a great return on equity. Still, we are minded to agree with the stock’s analysts, just a fifth of whom rate the shares a ‘buy’, according to FactSet. The next spike of geopolitical worries is likely to arrest the momentum. Hold.

Last IC View: Hold, 319p, 27 Oct 2020

Buys     
CompanyDirector/PDMRDatePrice (p)Aggregate value (£)Comments
Aston MartinLawrence Stroll (ch)27 Oct 205020,000,000

Purchased by PCA in placing

AbbeyCharles Gallagher (ch)30 Oct 201,5752,756,250

Purchased by PCA

HSBCJames Forese29 Oct 2016.25373,718

Converted from US$. American depositary shares

InnovaDermaMark Ward28 Oct 2069.5269,672 
AbbeyCharles Gallagher (ch)2 Nov 201,575236,250

Purchased by PCA

HSBCEwen Stevenson (cfo)28 Oct 20320.9118,746 
City of London Investment GroupRian Dartnell28 Oct 203,920117,587 
FoxtonsRichard Harris29 Oct 2034.374,122 
Altus StrategiesSteven Poulton (ceo)28 Oct 2061.568,771Average price
PrudentialAlice Schroeder29 Oct 201,91552,653

Converted from US$. American depositary receipts

Coca Cola European PartnersPeter Brickley28 Oct 202,89750,694

Converted from US$

AudioboomMichael Tobin29 Oct 20170.948,486Average price
FoxtonsIan Barlow29 Oct 2032.832,800 
Coca Cola European PartnersVictor Rufart29 Oct 202,82828,281

Converted from €

FoxtonsAlan Giles29 Oct 2032.718,758 
Metro BankAnne Grim27 Oct 206215,500 

 

Sells     
CompanyDirector/PDMRDatePrice (p)Aggregate value (£)Comments
JD SportPeter Cowgill (ch)30 Oct 20745.619,291,522 
Aston MartinMahmoud Samy Mohamed Aly Elsayed29 Oct 2054.62,048,023Sold by PCA