What’s going on?

• HSBC posted better-than-expected quarterly earnings
• It admitted it’ll need to start expanding into Asia sooner.

What does that mean?

• HSBC has had two big challenges lately:
  • it’s been making less from lending due to ultra-low interest rates,
  • while simultaneously having to set aside enough cash for bad debt allowances;
• Even though last quarter’s election and the pandemic drove a surge in investor activity and thus transaction fees, it wasn’t enough to save HSBC from a steep fall in profit YoY.
• Regardless of HSBC’s promises on more cost-cutting measures (additional layoffs) and a focus on faster-growing markets, investors still sent its shares down.

Why should I care?

For markets: Asia might be the place to be

• HSBC makes most of its money in the fast-growing Asia, and the firm’s intending to make it even bigger by scaling down in the US and Europe, and investing $6b in Asian economies.
• It’ll do that by looking after the wealth of the region with the hopes to become the go-to bank for the Singaporean, Chinese, and Hong Kong elite.

The bigger picture: Minimal impacts from the blackout in Texas

• Proof of Asia’s economic acceleration:
  • Taiwan – which just raised its outlook for 2021 – is expecting its economy to grow at its fastest pace since 2014 this year.
  • That’s mostly down to the combination of a successful coronavirus containment strategy and strong global demand for all the tech products it produces (more than half its total exports).

Content source: Finimize (2021) Red Envelope Days. Available at: https://www.finimize.com/wp/news/red-envelope-days/ [Accessed on Mar 6, 2021]