HSBC Holdings PLC (LSE:HSBA) shares getting caught up in the general worries over China and its property sector, in particular, are an opportunity, according to the analysts at Jefferies.
Indeed, the US broker has raised its earnings target by 6% for the next three years to 2025 due to the likelihood of higher net interest income and better returns on capital than expected.
“While the top down in China looks to be getting worse, not better, this economic sluggishness is not hampering travel into HK from the mainland and related account openings from non-resident Chinese.
“For instance, HSBC reported in the second quarter that new-to-bank account openings from non-resident Chinese were up circa two times on 2019 levels.
“Given the lagged effect between customer acquisition and revenue generation, we continue to see tailwinds to HSBC's Wealth and Personal Banking (WPB) business in Hong Kong."
Hong Kong Wealth and Personal Banking contributed 30% to the group's profit growth, representing 23% of second-quarter group pre-tax profit, notes the bank.
“While consensus has started to catch up to our US$8 billion/year buyback estimate, this is less the case for 2025E, where we remain 33% ahead on buyback.”
'Buy' with an upgraded 1,000p (930p) target is the bank’s view, which is 71% above the market price of the shares, which were flat today at 583.6p.