HSBC Plunges And Virus Woes

Second wave fears and a bombshell banking report drag on FTSE.

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European bourses are starting the week on the back foot with the FTSE leading the charge lower. Rising COVID cases, fears of tighter lockdown restrictions and a bombshell report on a bank’s suspicious transactions.

Tighter lockdown restrictions coming
There is a distinct lack of good news as the FTSE kicks off trading for the week. New daily COVID infections continue to rise sharply. With large pats of the UK seeing tighter lockdown restrictions and fears growing that London could be next. British Medical Advisor Chris Whitty is due to make a public briefing later this morning where warnings that the UK is at a critical point ahead of a very challenging winter are likely to keep sentiment depressed.

Bank’s can’t stay out of trouble

British banks are back in the spotlight for all the wrong reasons. A report that some of the world’s largest banks enabled flows of dirty money in suspicious transactions over a period of two decades, despite warnings from regulators is keeping the sector out of favor. HSBC (HSBC) was one of the 5 global banks which appeared heavily in the report, along with Standard Chartered (SCBFF), JP Morgan Chase & Co (JPM), Deutsche Bank (DB) and Bank of New York Mellon Corp (BK). 

Whilst it has been a while since the last banking sector scandal, it hasn’t been long enough. This is a sector which constantly appears to struggle to stay on the right side of regulators and the law. 

HSBC at 25 year low
Heavyweight HSBC is a standout loser as the global bank faces trouble on several fronts as it is caught up in political turmoil and an economic slump. In fact, things couldn’t get much worse for the bank which is reeling under COVID pressures and its increasingly difficult position in no-mans land, supported by neither the East or the West.
Not only is the suspicious transaction report extremely damaging, but the bank is on the brink of being added to China’s “unreliable entity” list, potentially threatening its plans to expend into China.

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