HSBC chief warns speculators 'set to attack' weak economies

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Keith Whitson, the chief executive of HSBC Holdings, yesterday swelled fears of an impending global financial crisis by warning that speculators were preparing to attack the currencies of some of the world's weakest economies.

The dim assessment came as HSBC said there was "evidence of increasingly fragile economic conditions in certain emerging markets" after it reported better-than-expected interim results.

Mr Whitson said: "If the rumours are to be believed, some organisations are building huge speculative positions and that is not helpful. When you have enough rumours you have to take them seriously."

He declined to identify at-risk countries. However, he voiced confidence about the resilience of the economy in Argentina, which is said to be vulnerable to default on bonds worth $130bn (£91.6bn).

HSBC said that it was positioning itself "conservatively" amid uncertainty over the impact of the US slowdown on the Asian and Latin American economies that provide half of its business.

It reported interim pre-tax profits up 4 per cent to $5.44bn (£3.83bn), with provisions against bad debts 20 per cent higher at $441m, including reserves for $4.9bn of loans to Argentina. Investment banking profits fell 29 per cent to $442m.

The shares closed 3.3 per cent higher at 844p.

Jon Kirk, an analyst at Fox-Pitt, Kelton, said disposal proceeds flattered the half-year performance. "I don't think these numbers should give anyone cause for joy," he said.

HSBC played downrumours it was considering a merger with the US investment bank Merrill Lynch.