Share buyback on hold
HSBC to raise more debt
Technical analysis shows upward channel broken
Europe’s largest bank produced a set of disappointing numbers today. The company reported a sharp decline in trading income at its investment bank. The bank was badly hit due to the collapse of two high profile borrowers; UK’s Carillion PLC and Steinhoff from South Africa. Both pushed the banks bad loan charges to $1.77billion for the year. The South African firm said back in December that it found accounting problems while Carillion actually went bust. The pretax profit in 2017 was less than the Street’s estimate (Actual $17.17 billion Est $19.55 billion).
The bank is no longer going to look at the share buyback program which usually boosts the value of the stock and it helps the firm in the longer term perspective. HSBC bought nearly $3 billion worth of shares last year and the incoming CEO does have a plan to continue the process but only after the debt sale is completed.
The below chart shows that we have broken the upward channel and there is a massive gap to the downside after the earning’s announcement
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