Investec Securities has turned positive on HSBC Holdings PLC (LON:HSBA), upgrading its rating to ‘hold’ from ‘sell’, although the City broker thinks the global banking giant’s fourth quarter numbers “may not be pretty”.
The broker also raised its target price for the FTSE 100-listed firm to 740p from 640p, with the stock trading at 766.9p in early morning trading on Tuesday, down 0.5% on last night’s close.
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In a note to clients, Investec’s analysts said they think the resumption of loan growth expected in full year 2017 results is a key inflection point, reflecting both the end of any significant run-off drag as well as a genuine re-acceleration of growth across Hong Kong, the rest of Asia-Pacific and in the United Kingdom.
They think HSBC can now credibly target around 5% per annum loan growth.
The analysts recommended switching short positions from HSBC into FTSE 100-listed, emerging markets focused peer Standard Chartered PLC (LON:STAN).
But they do not recommend buying HSBC shares at current levels, given its 4.7% estimated 2017-2019 dividend yield is unremarkable.