HSBC Encouraged To Stay Put

HSBC,the British banking titan,says it will remain headquartered in London.It had been unhappy with the regulatory regime,but now bank levies have been scaled back and more friendly regulators have come in after the recent Parliamentary elections.*
In London generally,home prices are up 5.4%,locking out first time homebuyers.*
HSBC still likes Hong Kong very much and says,if Great Britain leaves the European Union,they could still relocate there.*
HSBC also still plans to add 4,000 banking jobs in Southeast China,but the pace has slowed somewhat in the current economic conditions there.*
HSBC Holdings plc ADR (HBC)

HSBC,Changing With the World

HSBC,Europe's largest bank,has reported first half pretax profits of 13.6 billion dollars on a strong Hong Kong performance,up from 12.3 billion a year ago.The bank was helped by its brokerage customers using the Stock Connect link to the Shanghai stock exchange earlier in the year,when Chinese shares were still hot.Indeed,HSBC may move its headquarters from London to Hong Kong,pending completion of a review of the matter by year's end.
By contrast,its businesses slowed in Europe,the US and other emerging markets apart from Hong Kong.HSBC is selling its underperforming Brazilian operations to Banco Bradesco SA for 5.2 billion.It is also considering selling its lagging Turkish business to the Netherlands' ING Group.
HSBC set aside 1.3 billion to cover legal costs stemming from regulatory investigations into the rigging of foreign exchange markets by banks worldwide.On the plus side,its investment bank saw a 21% rise in FX trading revenue.The British retail bank also did well.You should work on the assumption that it is a bank we would like to keep,said chief executive Stuart Thomson Gulliver,because it's got excellent returns from what we see going forward and the UK is a profitable banking market.*
HSBC is in the process of moving its UK retail operations headquarters to Birmingham within three years.This British bank will be renamed and have a staff of 22,000.*
We don't see anything alarming coming from what has happened recently in China,Mr.Gulliver added,but there will be some muted impact on our business both from the sell-off in the stock market and from the more reduced economic activity we have seen.Now it's less than two months since our investor update where we unveiled our actions to capture the value of our international network in the changed world.Executing these actions is our number one priority.Work is proceeding in all of these areas,in particular those aimed at reducing risk-weighted assets,cutting cost,and turning around or disposing of underperforming parts of the business.
In order to maintain broad-based growth and a diversified profile,we expect around half of incremental risk-weighted assets to be redeployed to Asia,with the rest spread across Europe,the Middle East,and North America including Mexico,Mr.Gulliver noted in a conference call following the earnings release.*
HSBC wants to boost its growth in Asia by expanding its insurance business in the Pearl River Delta region of China,and seeks to return its global banking and markets division to profitability.Overall,it wants to save 4.5-5 billion dollars annually by the end of 2017,shedding 8,000 jobs in the UK and 25,000 worldwide,although it has added 2,200 compliance staff.
HSBC has increased shareholder value by initiating a five billion dollar buyback and raising its dividend by 124% to 0.28 a share.*
HSBC Holdings PLC ADR (HBC)

Asia This Day:Markets Fall on US Shutdown Worry

The MSCI Asia Pacific index fell 1.1% in early Monday trading on fears of a US Government shutdown at midnight because of the budget impasse in Washington.All 10 industry groups in the index retreated.*
Also looming in Washington is the conflict in Congress over raising the debt ceiling,which is necessary for the US Government to continue borrowing the money it needs to sustain itself.The decline in Asian stocks is really a matter of selling into the strength of the Asia Pacific index's 7% gain in September,in light of the impending double fiscal crisis in US Government finances.*
Both Hong Kong and mainland China markets will be closed Tuesday for a holiday,and mainland markets won't reopen till October 8.*
The HSBC-Markit Economics Performance Manufacturing Index for China came in at 50.2 in September versus 50.1 in August,missing the estimate.*
A comment by Gurbat on Bloomberg's website said the BSE Sensex is poised to increase its downward momentum.The only bright hope is the holiday season for the next six weeks.But given current dynamics the best you can hope for is a retest of highs this year.Added faintandfuzzy:Nice to see US politicians acting like children again...taking the rest of the world economy with them.*
About 19.6% of Hong Kong's citizens are now poor,a new report for the territory's Chief Executive said.Home prices there have doubled since 2009.A family of three has a median income of 23,100 Hong Kong/2979 US dollars per month,according to government figures.
Poverty affects Hong Kong's harmony and stability,thus affecting its long term competitiveness,Chief Executive Leung Chun-ying said Saturday.In 2012,the number of millionaires in Hong Kong rose 35.7%,to 114,000,a Cap Gemini-RBC report indicated.

Asia This Day:Manufacturing Declines Across Region

Manufacturing is in decline across the Asia-Pacific region,according to the latest data.In Japan,the Tankan index of large manufacturer sentiment fell to -3 from -1,the Bank of Japan reported,and there was a second straight decline of industrial production in August.
HSBC's purchasing mangers' index showed 11 straight months of manufacturing decline in China,while the official Chinese PMI charted the second straight monthly drop on diminished internal and external demand.In South Korea,exports fell 1.8% in September.
Australia is also slowing down,with its manufacturing index slipping 1.2 to 44.1,meaning contraction,in a seventh straight month of decline.China's economic growth is at a 22-year low.The European debt crisis and fears about the US economy are crimping Asian business activity.
The MSCI Asia-Pacific index fell 0.28% in early Monday trading.Markets in Hong Kong,Shanghai and Seoul were closed for holidays.
The Chinese Communist Party will hold its 18th Party Congress on November 8.At that time,new leaders Xi Jingping and Li Keqiang will take office as President and Premier,respectively.

Asia This Day:Japan Restarts Nuclear Plant;Confidence Up

Despite loud protests,Japan has restarted its Fukui Prefecture Ohi nuclear power plant,saying the quality of life was being hurt by the recent switch to more expensive fossil fuels.The country had placed a moratorium on nuclear power a few months ago for safety checks in the wake of last year's meltdown at the Fukushima nuclear plant.
The Tankan survey of Japanese large companies showed a greater than expected increase in business confidence.Australian home prices rebounded the most in two years on rate cuts,while manufacturing contracted at a slower pace in June than in May.
The HSBC China Purchasing Managers Index fell to 48.2 in June from 48.4 in May.It has shown contraction for the past eight months.Manufacturing orders and export demand are down on the Euro-zone debt crisis.The Shanghai Composite Index was down 0.42% in early Monday trading on the news.
Hong Kong's stock market is closed today following the inauguration of the territory's new chief executive,C.Y. Leung,on Sunday morning.Chinese Premier Hu Jintao attended the ceremony.Tens of thousands of protesters marched through the streets,denouncing Mr.Leung,a former real estate executive,as a Beijing figurehead.A big fireworks display was nontheless held to celebrate the 15th anniversary of the handover of Hong Kong to China by the U.K.
India's Nifty Fifty stock futures index rose on optimism about a Euro-zone agreement on how to resolve the debt problem.
iShares MSCI Japan Index Fund(EWJ)

Central Banks Seek Growth

Central banks are cutting interest rates in hopes of sparking flagging economic growth.The Bank of Canada was first last week,cutting its overnight rate a quarter of a point,from 4.5 to 4.25.As late as July,the BOC was worried about inflation.Now it is concerned about deflation and the prospect of a failing economy.The Bank of England followed suit.It cut its key rate to 5.5 from 5.75.Growth has begun to slow,though the upward risks to inflation still remain.Credit tightening poses a risk to the Gross National Product.Slowing demand growth will ease pressure on capacity.The European Central Bank left rates unchanged.That may amount to a concession,since the ECB has been a hawk on inflation,and might prefer to raise rates.Today at 2:15 PM Eastern,the Federal Reserve will issue its decision on interest rates.It is expected to cut as well.Bill Gross of PIMCO would like to see the Fed cut all the way down to 3%.To restart the near-recessionary economy,we will need that.The Fed needs to reduce steadily and significantly.There has been a breakdown of the modern banking system.The tangled web of subprime loans has created a shadow banking system.The banking system must be shored up.Home prices may fall another 10% over several years.The banking system exhibits a freezing up of liquidity and a reluctance to make loans to the vital part of the economy.The Fed must use all means to provide liquidity.Troubled Swiss bank UBS has written down another 10 billion of subprime securities,following an initial write-down of 3 billion.To cover this,it has sold a stake in itself to the government of Singapore and a secret Middle Eastern investor.Shares of UBS rose on the news.Longterm investors are building positions in such financial stocks,which are trading at a big discount,although they could well drop further before recovery.Similar holdings are HSBC(HBC) and Citigroup(C).