"This board has been very quiet with nobody posting anything much. Too busy counting their gains ?"
Normally we only actually gain (or lose) when we sell our holdings, but there are some exceptions - when a company is taken over, or hits the wall - like Carillion.
When I first joined this board last February, Pref and Monty were significant, frequent contributors here, but as both have sold out of HSBC for the time being, it is hardly surprising that things have gone a bit quiet!
I tend to avoid these discussion boards at weekends, as there is even less new information around - with all (world) markets closed.
Also, there is relatively little coming from the board of directors as we head towards the final results in just over four weeks time. Hopefully we will not see a repeat of last year, when the share price fell significantly after the results were announced - but thankfully it recovered well, ending the year at a decent level.
If Jefferies rather bullish target price is achieved, then perhaps lots of investors will be counting their (paper or actual) gains. It would be interesting to know what timescale they are using - i.e. when is 920p likely to be reached?
Let's see 800p first - that is the next major "hurdle" - then 850p!
An increased dividend would be great - in fact if the share price continues to increase, the dividend remains flat, and the pound advances further against the dollar, then the yield for new UK investors will be significantly reduced.
When investing in equities, we should expect to see fluctuations in the share price, and often need to be patient to achieve the best long-term results.
For those with nothing better to do, keep counting out your money, or if you prefer, start eating bread and honey - perhaps something special like Manuka honey, or even honeycomb!
Jefferies believes HSBC (HSBA) will be a contrarian long for 2018 as it predicts dividends to rise next year.
Analyst Joseph Dickerson retained his buy recommendation and target price of 920p on the shares, which fell 7p to 784.9p yesterday.
We took stock of the backdrop in which HSBC operates and gained more conviction that consensus dividend per share will move towards our $0.66 level in 2019, he said.
The Hong Kong retail units are benefiting from rising Hibor [the inter-bank lending rate on the Hong Kong dollar] and the bank is taking market share in capital efficient areas such as Hong Kong and UK mortgages.
Dickerson added low stock-specific risk justifies valuation, rounding out the investment picture.
China is becomming much more of the focus for sure but HSBC will want to grow everywhere.
Not incentivised in US? It's just become a lot more attractive. In fact the incomming fella, whatsisname, mentioned buying US assets as a growth strategy (unless I imagined it). The new tax regime is much more favourable surely? Once the initial hit has been taken. And, the bonfire of regulation is a license for banks to run riot. The next 5 years should be high times in the US while we stockpile scandals and fines for the following 5.
In Europe HSBC is squarely on both sides of the Brexit fence. Don't doubt it for a second.
That said, the SP does still feel very rich at the moment. A frothy market generally.
HSBC has recently been the beneficiary of strong demand for all equities in the Far East, especially since the flood of investors from China. The company's 'pivot' to Asia strategy seems ever more consuming now, with Europe, the U.K. and the U.S. relegated to 'also-ran' status and the direct investment by Ping-An in HSBC just reinforces this tilt.
Given another $100million fine and a three-year deferred prosecution deal in the U.S., little incentive to grow its US company and a new and unfavourable tax regime, it looks unlikely that it will be pursuing much growth there. In the U.K. and Europe, the bank looks to be on the wrong side of the Brexit fence and is facing the looming Gupta scandal scheduled to erupt in March; not too inviting a prospect either.
So retrenching looks the order of the day and perhaps HSBC will again, one day, be just the Hong Kong and Shanghai Bank. We still have a month to Q4 but what to do now?
HSBC shares are dollar-denominated and are therefore at the mercy of the dollar, which is currently nosediving with a US Government shutdown on the cards this week (this fall is not helping my hedging move into US equities either). However, despite this, the current HSBC sp is still very rich and I don't see any massive price hike on the horizon before Q4.
Anyway, this is not the time to sell dollar-denominated shares, so I'm holding fire until after 01 Feb when the U.S. companies' Q numbers will be out and I can then work out what percentage of the whole Fund 'pot' I can allocate to HSBA.
Sorry to hear about the car, sounds like a serious collision so good to hear that no one was hurt. Somehow these things always end up costing you money and inconvenience one way or another. Insurance never covers everything, especially if they declare it a write off.
Regarding RUSP, this went into my plan when the price was 146 just a few weeks ago. For some reason the price has jumped to 155, really not sure why. Very good for my existing holding obviously but I confess at that price it is making me think twice about going ahead with a further purchase. Make go with another REIT instead am thinking on that.
On NCYF looking at this the price has been pretty stable in the range 60.5-62 over the last 12 months. So not quite sure why your charts are looking negative. Im hoping for an XD entry at about 61 so towards the bottom of that range. From reading some other boards I think this stock has suffered from the MIFID 2 / PRIIP issue of not having a KID which means that it cant be bought only sold by some brokers. This may have given the impression that everyone is just selling. Price has held up well under the circumstances, I wouldnt mind if it dropped a bit before XD !.
Seems we are thinking similarly about a correction but difficult to call and staying out of the market completely could be costly if this situation goes on for another year. But you will have read my thoughts in my other posts.
Thanks very much for your response and apologies for not replying sooner. Had a bit of an issue to deal with so hardly been online - our car was broadsided and is now slightly bent. Best car we've ever had, and only had it a few months, so we're both a bit gutted. No injuries, thankfully - so counting our blessings. Apparently all captured on CCTV although I haven't seen it as the powers that be say data protection prevents them from allowing me access!!! Only the police and insurance companies are worthy enough, I am told. The world's gone mad. Ins Co are on the case though and (so far) have been helpful but the whole thing is a headache we could have done without. Enough of my troubles, but thanks for listening ;-)
I hold several REITs - lots out there to choose from and most provide good income. Hope I'm holding the 'right' ones. I almost took the plunge with ESP a while back but now glad I didn't.
NCYF I have three tranches of already. Room for another but the lines on my chart are making me hesitate. In fact, for the time being I'll sit and watch, but not sell what I already have. It's always good to have some cash in hand to buy another tranche for a favourable price. Actually, thinking about it, this tactic doesn't always work! But so many things look toppy at the moment and we are waaaay overdue for a decent correction.
RUSP has been on my watchlist for a while but I've always hesitated with it. It's potentially quite risky. A small(er) stake at some point would be good but again looking at a chart I think a top might be in - there are several lines of resistance around the 155 level. That's not to say they won't be overcome. In fact they probably will be in due course, but shorter term I think there is heightened risk.
I'm not knocking you (or anyone) for jumping in with either/both of the above - I've been wrong often enough. Good luck to all of us because I think 2018 will turn out to be an interesting year what with Brexit, interest rates, inflation, Trump, Rocket Man, Uncle Vlad, the middle east, etc. It goes on and on. I need to stop thinking about stuff so much.
Good to hear from you, been a while since our conversation on the NG board.
Seeing as its you I will tell you. I am planning to buy RUSP and NCYF. Actually I hold some of each of these already and just plan on buying a few more.
RUSP are Raven Russia 12% preference shares. They pay a 3p dividend every quarter, yield at their current price of 155 is about 7.75%. Raven Russia is a sort of Russian warehouse REIT and comes with all of the risk that a Russian investment brings. Actually the company is run by British people out of guernsey and Woodford and InvestorMedia perpetual are big holders. But politics and Russian tensions DO affect the price on occasion. Price has just jumped in the last few days, planning to wait till the next ex div date on 15/2 to buy more.
NCYF is a investment trust that holds a variety of things including REITs. Bonds and Preference Shares. Pretty new to this one myself but it yields over 7%. Going XD on 25/1 which will take 0.99p of the price and increase the yield still further. I plan to buy some more on that day.
Anyway just because I plan to invest in the above I wouldnt want anyone to interpret this as a recommendation to buy. Nor is intended as any form of financial advice and anyone reading this should DYOR. Anyone investing in these stocks does so totally at their own risk.
Well I gave some thought to 3 possible scenarios:-
1. Everything keeps going along as now and we continue to drift upwards
2. We have a ~10% FTSE correction and then recover
3. We have a > 10% FTSE correction plus a recession and / or brexit disaster or a corbyn govt.
For scenarios 1 & 2 my plan would be just to hold. I have reduced my equity exposure so damage should be tolerable in scenario 2, 10% of my equities is much less than my dividend income. If I completely exit the equity market then I will lose out on dividend income and capital growth in scenario 1.
For scenario 3, well if there a general election is called then I will just sell everything except for my prefs on the day that this is announced.
My thinking is that REITS will only be at risk if there is a recession as they make their money mainly by accumulating capital gains on their property portfolio. They might get into trouble in a recession as retailers etc. might not be able to afford their rents and then the REITS wouldnt have enough income to pay off their debts and pay dividends. If things start to go bad I may have to reduce my holdings, I will play it by ear.
If I buy any new FTSE 100 stocks right now I fear that I might well be buying high.
Its all personal conjecture, no-one knows whats actually going to happen. But I feel that you need to have some sort of plan. DYOR etc. !!!
I see that there have been several new posts during the weekend, some of which were addressed to me.
TJ, you certainly timed those purchase well on behalf of your grandchildren and I am quite envious of your average price of 530p - the best that I could do in 2016, was to take very good advantage of the scrip option, while the share price was low, and continue to average down to just below 650p, but because I took some scrips at each opportunity last year, that has crept back up to just over 651p!!!
Pref, so REITs is your new "strategy" for 2018, but surely they will also be affected to some extent by any correction in the markets - when it comes. I expect there will be a correction, but we don't know: when; how severe it will be; the duration of any downturn, and how quick any recovery will be. In the meantime we could miss out on other very good opportunities.
Monty, there was an article in the Business & Money section of yesterday's Sunday Telegraph entitled "Chinese whispers are just what the US needs"
HSBC shares started well in HK today, but tailed off a bit towards the end of the trading day - they just opened lower here, and I see the FTSE 100 is also slightly down, and the pound continues to rise against the dollar, but has fallen slightly against the Euro.
Hope you're right for your position Montyz. I can only see negatives for US multinationals. They can already invest their cash abroad more efficiently than they can at home. The fact it's piling up probably means those companies don't have much more growing left to do. They are surely at saturation point in the US. I can't think of how they would invest the money. It's currently being used as collateral to borrow at record low rates anyway. So they are swapping around 0% for the repatriation %.
If the money is used to take manufacturing back to the US it will just mean increased prices.
Genuine growth will trump any tax reform impact. I'm sure you'll do alright while the world powers on anyway.
Happy New Year. Good to hear from you. Hope your US investments are doing well, the stocks themselves I know are just roaring ahead. But will / can it continue ?. Maybe it can with what youve said about repatriated cash ?.
I used my old spreadsheet again today just to see where my Apple/Facebook/Google investment would have been doing now. The stocks themselves are up by ~13%, ~4% and ~7% respectively - Facebook had a bad day on Friday due some announcement made that day. Anyway when you take my brokers 3% charges (1.5% buy and sell) and the increase of the £ (up over 6% over the period) then by my calculation my investment would be up by a princely 1.4% as of today. OK it may just get better from here, but frankly I only ever had a 3 month window in mind for this investment. You have almost certainly done better as you have Amazon instead of Facebook, the latter having been by far the worst performer.
As for HSBA what can one say, its done really well - better than investing in my US choices anyway. And better dividends as well. But where will it go from here ?, I have no idea as its in uncharted territory now I think. Could go either way. If I had to invest in a bank right now I think I would go for Lloyds myself, good dividends and a pretty clear indication that the share price is likely to increase.
But as I said in my earlier post to Steve I have no plans to do either. Instead Im planning to buy some REITS and fixed income investments all yielding 7-8% and just sit back and enjoy the income. Personally I am planning to keep clear of new equity investments for now.
I don't think that the world markets have really started to measure or come to terms with, the implications of the U.S. tax changes and the knock-on effects for the rest of the world. Just the repatriation issue means that Apple, for example, could afford to buy Disney and Netfix outright and still have $40 billion of repatriation cash left over.
Though not nearly as hefty, both Amazon and Google also have huge offshore cash reserves which, after repatriation, they will undoubtedly use to grow as well as to kick-back some surplus cash to the shareholders.
The reason for the recent growth in the price of U.S. shares is therefore clear. What is not clear is the reason behind HSBC's recent share price growth which seems to owe more to 'Chinese Whispers' than any reliable information.
I moved over to U.S. stocks as a hedging move, after selling the HSBC holding and, dollar movements notwithstanding, I don't regret the tactics .... yet. I will take stock again after 01 Feb, when all the U.S. company Q results will have come out, any divis paid and the air may have been cleared a little about the effects of the U.S. tax changes. I will then start moving cash back into HSBA, provided the shares are performing according to plan - at the moment their movement is hard to read, is possibly of Chinese origin and is dollar driven.
So will Q4 produce the recovery in earnings and profits that Q2 and Q3 did not?
Will Gulliver pull a rabbit out of his hat as he departs?
What could possibly go wrong?
Well congratulations, your faith in this stock has been bourne out and you will have accumulated close to a 10% capital gain over the 730p when I sold out. I am not complaining though, I had a very very good year last year and my risk antennae which caused me to sell out here saved me quite a lot of money on other stocks. So I just have to put the loss down to the cost of operating my strategy.
I reckon HSBA might well go past 800, but who knows as its unknown territory here as far as I am concerned. All of the banks have been doing well, with the possible exception of Barclays. Markets seem to have gone crazy, FTSE 8000 is not that far away. Suspect its all driven by surge in the US markets. I fear it may all come to a bad end, but probably not until mom and pop have invested their last dime.
So I am entering 2018 even more risk averse than usual, if thats possible. My plan right now is to invest in a number of high yield REITS and then hide behind the sofa with a reduced set of equities, my prefs and the REITS and hope that the most of any carnage passes me by. That being the case I have no immediate plans to make new investments here or indeed in any other FTSE 100 stock given the current all time highs.
I expect Monty will be back soon from his US adventure. My Apple, Facebook, Google punt didnt work out really as the rise in the £ against the $ together with broker imposed currency costs were just too much of a headwind.
I shall keep reading the board occasionally but dont expect to be posting much as I am not planning to be invested here (even if there is another buyback).
I wish you continued good luck with your investment.
As a small investor in HSBA together with my gandchildren I think I might prefer another share buy back as long as the tentacled squid gets to do it. Whateve one thinks of them as a compnay they were much more successfuk when they were in charge than the last mob!!!
800p plus would be a dream, I put my grandchildren into HSBA the day after the BREXIT vote at 445p........My own holding averages out at about 530p.
With high volumes traded in both HK and UK, a sudden spike in the share price on Wednesday, and big movements in the sterling/dollar exchange rate, what is going on?
There have been some explanations, but would those really cause such dramatic movements?
I expect that by now the broad brush profits are known by the "inner circle" - usually a small, select, trusted team, who will be expected to closely protect any price-sensitive information, while the auditors trawl through the accounts, and until the official figures are announced on 20th February.
Has someone let something slip - perhaps an unguarded comment, thought to be of little significance, but actually quite important?
According to members of another discussion board, there are now rumours of a special dividend and/or further buy-back.
See my note on Monday.
There are two parts to the Tax reforms that should concern investors:
Firstly, the interest charged by the international banks to their U.S. subsidiaries, on the loans they need to operate, has up to now been reclaimable against U.S. Tax. Those rules have now changed and such interest payments are no longer reclaimable; Deutsche flagged this as a reason for a very substantial annual provision. HSBC has made no comment on this to date.
Secondly, companies which have established Deferred Tax Liabilities will see these liabilities substantially reduced by the new U.S. tax laws, but HSBC cannot take advantage of this situation because when I last looked, HSBC's U.S. operation didn't make a profit to be taxed on! I not sure how long this situation has been going on but HSBC has been flogging off its mortgage and loan books at a loss for years, in order to escape the pain of its big American 'adventure' as quickly as possible.
So no Tax breaks and Tax on the annual interest payments made to the parent company.
I think that HSBC should let investors know about this.
Has anyone got a view on how the change on deductibility of interest will effect banks. I think that is what is proposed and it feels like it should be a drag on HSBC, instead the shares are having their day in the sun. SL
Late posting as busy posting this elsewhere (on BARC+ BB), but 20 mins ago, a 2nd & final short for reasons as before, though I expect it to take longer than initially anticipated see positive outcome. Looks overbought, but I could be wrong. - GLA.
"Asian focused HSBC and Standard Chartered [are pushing] higher amid a rise in Chinese inflation overnight. The rise of inflation and the impact that would have upon monetary policy is going to be a key theme for 2018, with the expectation of further upside driving up margins for banks," said IG market analyst Joshua Mahony.
Consumer prices in China were up 1.8% on year in December, the National Bureau of Statistics said earlier on Wednesday, which came in below forecasts for an increase of 1.9% but was up from 1.7% in November. "
Maybe someone showing some enthusiasm for global growth. Or, there was a rumour yesterday that Alibaba was seeking an HK listing which is seen as a big coup for the exchange. Maybe it's general HK froth.
Happy New Year to you as well, and I hope you or yours are over the worst.
It is right to wonder what's going to happen to HSBA on or after Feb.20 because there are so many unknowns around at the moment.
Take Deutsche today, for example, the new U.S. Tax costs associated its continued presence in the US, meant that they took a pounding when everyone else was enjoying themselves. It makes you wonder what kind of announcement HSBC is going to make about this matter, and when?
One thing we do know though is that, because the U.S. co. is a direct subsidiary of HSBC, it is obliged to finance all it's operations in the US by loans from the parent company: up until now, the interest on those loans could be claimed against their US tax bill - not any more though! The longer-term implications of this and the size of the immediate write down required just to keep operating are unknown. Will they say anything soon? Unlikely!
Still, we will soon have a new top dog and a Gulliver poodle. Around here, such mongrels are called Labradoodles and the Sevenoaks ladies like them because they keep their hair on. Let's just hope that the new boys manage to do that once they are let out into the garden together!
Not starting my HSBA shopping until the first week in Feb.
I had intended posting before this, but family circumstances prevented that, so a belated Happy New Year to you all!
Last year (2017) was good for long-term HSBC investors within the UK - the share price having risen from 656.90p at the end of 2016 to 766.90p at the end of 2017 - an increase of 110p per share (over 16.5%) plus four good dividend payments during the calendar year.
For those of us brave/foolish enough to have taken some scrips at each opportunity, the share price did at least close the year just above the highest scrip price!
The shares have now fallen back slightly, but are still trading above 750p.
It will be interesting to see what happens now, especially during this relatively quiet period before the annual results are announced in about six weeks time - and immediately after!
I currently hold BDEV, PSN & TW. Yield very good on all of them (5-6%+) with return of capital plans in place on most. Budget in Nov knocked them all back a bit, but actually if you ask me virtually everything that was done was positive for housebuilders. Except for the review of their land banking practices.
If you compare their current share prices with where they got to pre-budget then
BDEV is at 650 now (made it to ~700 pre budget for a while)
PSN is at 2740 now (made it to ~2900 pre budget)
TW is at 208 now (thats actually a bit higher than the ~207 pre-budget).
Of course BKG is and the smaller builders are also options, but BKG is somehow always just too expensive for me to purchase for some reason. Can never bring myself to buy it !!. Smaller builders I have never really investigated. Did hold MCS for a while but that did NOT do well.
Anyway of the 3 I hold now all offer good dividends and personally I think their prospects are good, unless the land banking thing blows up into a problem. In terms of upside potential my guess is that BDEV and PSN are best placed. Just a personal guess.
But as always anything can happen, especially if the market goes south !!!. There can never be any guarantees with shares.
So take care and DYOR etc.
PS CGI doing well by the look of it !! Almost at breakeven now.
End of year chaos and confusion in the markets because nobody really knows how the new U.S. Tax regime will affect companies' short and long-term results. Rumor and gossip pass for facts and Apple seems to be one of the worst affected.
Apparently now, the low take-up story applied, not to i-phone X, but to i-phone 8/8plus but it will all come out in the wash at the next Q report at the end of Jan. (they go ex-div again on 07 Feb.). Apple should see a large ($11 billion) tax break on deferred tax liabilities and they should also be allowed to pay the repatriation sums over 8 years! Make of that what you will. I will be well into HSBC shopping by Feb. anyway.
Boxing Day wasnt good for US tech stocks though, AAPL especially. Just checked how my 3 holdings would have been doing now and I would be in a small loss situation once again. Not quite sure what your reference to Apple paying a dividend refers to, yield is only 1.4% and half of that was just paid in November ?.
HSBA doing very well really, 762 as I right this. Not sure how markets are going to do in 2018 though, planning to scale back my equity exposure just in case..... North Korea could flare up again too ?.
Sorry not to have responded earlier but I have been having problems with iii.co. and their newfangled site. For some reason, they would only communicate by post because they had an old mobile number, however, all is now well ... I hope!
As you say my temporary Apple and Google HSBC alternatives are doing fine, Amazon is a bit of a laggard though. The point about my move was that I needed to reduce the risk that holding HSBA, for nearly three months without any company news, might hold.
As it happens, the HSBA price has held up well but who knows what the next seven weeks will bring. At least Apple will pay me a dividend while I'm waiting to dive back in, that and the graph of its sp for the past months looks more encouraging.
Just checked out how the AAPL, FB & GOOG shares that I sold would have been doing now as US tech stocks have been doing pretty well. £ also down quite a bit against the $. I reckon Id be about 2% up by now had I held, as opposed to 1.5-2% down when I sold. Nasdaq futures up again today so more gains to come probably.
So I am guessing that your tech stocks are probably well on the mend by now ?.
Closed for a very quick 10+ pts. Not because I dont think itll go lower still later, but with leverage Id rather book quick gains & like I said, these days shorting stocks is a rare move for me. Glad to focus elsewhere. - GLA, long or short.
Agreed CB2. I paid 612p in April 2014 and watched it down to 418p in April 2016. As a long term investor, I held on, mainly for the divi, and bought again in November 2016 @ 604p giving me an averaged price of 611p. With dividends, I am now seeing a healthy profit of 41% which translates to around 11% pa. I'll settle for that.
Well wouldnt you know it, 3 months of a $2Bn buyback and the SP does nothing. Then suddenly it goes from 723 to 770 in less than a week. There were the Mexico and Ping An news items I guess but confess Im suprised these were worth best part of 50p.
Anyway, congratulations to all holders. I got within an inch of buying back in at 720, but thats the way it goes.
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