HSBC Shares Surge on Dividend Bets as Turnaround Gains Steam

(Bloomberg) -- HSBC Holdings Plc shares surged as much as 8% in Hong Kong trading on optimism Europe’s biggest lender may soon resume paying dividends as a turnaround gathers speed.

The shares rose 6.5% to HK$42.35 in Hong Kong, making it the best performer in the benchmark Hang Seng Index. They have still declined 30% so far this year.

“This is mainly due to the change in market expectation, as HSBC’s operating conditions aren’t as bad as expected previously,” said Richard Cao, analyst at Guotai Junan International. “Its valuation is also attractive so a catch-up rally is possible.”

Goldman Sachs Group Inc. on Tuesday advised investors to buy the London-based lender, which beat analyst expectations in the third quarter and signaled it may resume limited dividend payments for this year. British regulators have signaled a willingness to soften their stance on payouts, people familiar have said.

The shares are up about 50% from a 25-year low at the end of September.

Continued outperformance would depend on earnings upgrades driven by an improving economic environment, better cost management as well as asset disposals, Goldman analysts led by Hong Kong-based Gurpreet Singh Sahi wrote in a Nov. 24 report.

JPMorgan Chase & Co. said in a note on Monday that Joe Biden’s victory in the U.S. election eases “geopolitical tail risk” for the lender.

HSBC’s shares have also been rising since its biggest shareholder, China’s Ping An Insurance Group Co., raised its stake in the lender.

©2020 Bloomberg L.P.