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HSBC Holdings plc Could Help You Retire Early


The FTSE 100 has not had the best start to the year, with the index being down 4.2% in the 5 or so weeks since the New Year was ushered in.

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A key reason for this fall has been doubts about emerging market growth, with investors seemingly becoming nervous about the sustainability of the growth rate across the developing world.

As such, one stock that has been hit a little harder than most is HSBC (LSE: HSBA) (NYSE: HSBC.US), which is down just over 6% since the start of the year.

As most Fools know, HSBC has focused on increasing its exposure to large parts of Asia in recent years, as it seeks out the typically higher growth rates than those experienced by sector peers such as Lloyds and RBS, which focus mainly on the UK.

Therefore, the slightly disappointing return for investors in HSBC in recent weeks is understandable: companies more exposed to emerging markets have been marked down more than companies that are more reliant upon the UK and USA for sales.

However, now could be a great opportunity to buy HSBC — especially for long-term investors who have at least one eye on retirement.

Sure, the emerging market growth story has faltered somewhat over the last couple of years. This, though, is to be expected, since a glance at history shows that no country or region has experienced a smooth transition from ‘developing’ to ‘developed’ status. In other words, there are bound to be some lumps and bumps along the way; periods where growth disappoints and investors begin to question the long-term prospects of a country based on short-term facts and figures.

Quite possibly, now is the perfect time to buy into the emerging market growth story. China, for instance, is transitioning towards a consumer-driven economy. Consumers, as inhabitants of the UK are only too well-aware, need credit to buy things and the banks that provide that credit can stand to increase profitability as a result.

Therefore, in addition to offering vast long-term growth potential, HSBC also provides a yield of 5.5% as recompense for the short term volatility that its share price may continue to exhibit.

That potent mix could help you to retire early.

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> Peter owns shares in HSBC.

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