Why I’d Buy HSBC Holdings plc And Hold Standard Chartered PLC

HSBC Holdings plc (LON:HSBA) and Standard Chartered PLC (LON:STAN) are under the spotlight.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

HSBC (LSE: HSBA) and Standard Chartered (LSE: STAN) may move their headquarters away from the UK, but there’s no place where they can hide. In this context, I’d still buy the former over the latter, although there are safer options in the marketplace. 


HSBC has launched an immediate review into whether it should move its headquarters, it emerged on Friday, while Standard Chartered is one obvious candidate that could relocated to Hong Kong. 

HSBC’s Douglas Flint told the CNBC that relocating the bank’s headquarters back to Hong Kong would be potentially interesting. 

Such a strategy could do more harm than good to shareholders over the long term, however, but I still believe that HSBC is a safer option than Standard Chartered, and its shares could easily hit 700p by the end of the year.

At a time when the investment banking model is being reviewed, London remains the capital of financial markets worldwide: it’s worth considering that investment banks have faced much tougher regulations when helping clients float in Hong Kong for years now, while record-breaking fines have come from the US. 


As the regulatory landscape gets tougher and banks continue to struggle to make their cost of capital, HSBC is reconsidering its domicile, news of which pushed up the stock by 3% on Friday. 

We live in a world where allegations of fraud against a bank becomes reality most often than not, and that’s the biggest risk when it comes to investing in banks right now.

So, why are investors betting on HSBC, which also surged 4% in early trade on Monday in the wake of spin-off rumours? 

Quite simply, its assets portfolio is very attractive and the bank has options with regard to funding and capital allocation.

Spoiled Kids

Bankers aren’t too different from spoiled kids, and that showed in HSBC’s announcement on Friday. 

HSBC is also is weighing plans to spin off its British retail bank business, which could be worth between £20bn and £25bn, depending on trading multiples assigned to the unit. 

The stock has gained almost 7% in less than two trading sessions, and may contine to rally either based on expectations or if changes are swiftly implemented.

What HSBC and Standard Chartered executives should keep in mind, though, is that transparency is needed — and they should be based where transparency is granted. 

First, Britain’s legal structure offers reassurance to investors worldwide, while the importance of London’s time zone must not be underestimated.

Second, moving headquarters would not be a cheap option, as HSBC would have to reapply for hundreds of banking licences. 

But there is more than economics at stake here — reputation is on the line, too. 

Just 10 days ahead of the general elections, HSBC may be trying to put pressure on the UK government, but it’s not the UK government that has changed its approach to regulations since the collapse of Lehman Brothers: the banking compliance systems have changed globally, and regulators have simply decided to tackle some of the most serious issues in the industry such as money laundering, tax evasion and similar crimes that have been favoured by banks’ behaviour for years. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alessandro Pasetti has no position in any shares mentioned. The Motley Fool UK has recommended HSBC Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

£20,000 tucked away? Here’s how I’d aim for a £29,664-a-year passive income

This Fool wants to debunk the myth that making passive income is impossible. With £20,000, here's how he'd do it.

Read more »

Dividend Shares

Starting with £0, here’s how I’d turn my Stocks and Shares ISA into a second income machine

Jon Smith explains how compounding his dividend payments can help him to grow his Stocks and Shares ISA from a…

Read more »

Happy parents playing with little kids riding in box
Investing Articles

A 9.7%-yielding FTSE 100 dividend gem that could create generational wealth

A sizeable investment pot that can be passed onto the next generation could be built with much smaller investments over…

Read more »

Investing Articles

Up 31%, do Lloyds shares have more to give?

Shares in major FTSE 100 bank Lloyds are on a charge. But what could be in store for the stock?…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Time to sell this FTSE 100 underperformer, says Goldman Sachs

Analysts at one investment bank have a ‘sell’ rating on FTSE 100 stock Diageo. But could a short-term weakness in…

Read more »

Arrow symbol glowing amid black arrow symbols on black background.
Investing Articles

Down 5%, Glencore’s share price looks a serious bargain to me now

Glencore’s share price looks undervalued to me, supported by strong earnings growth prospects and the potential resumption of extra shareholder…

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

I’d invest £6,580 in this FTSE 250 REIT for £500 passive income

This FTSE 250 renewable energy enterprise is on track to become a Dividend Aristocrat! Here’s how I’d invest to earn…

Read more »

Investing Articles

Buying 1,000 of some dividend shares today unlocks £45 in weekly passive income!

These shares are among the biggest dividend payers in the FTSE 100. Should investors be buying them now to earn…

Read more »