Market Report: HSBC hit as 'safe haven' status is questioned

The banking giant HSBC was on the back foot again last night as speculation about its capital base refused to go away. The banking giant retreated to 625.25p – down 6.96 per cent or 46.75p – amid persistent concerns that it might have to fall in line with its peers and raise capital or, alternatively, reduce its dividend to conserve cash.

In a note to clients, Cazenove said the bank's status as a "safe haven" was at risk as rivals bolster their capital ratios and loan impairments rise as the global economic slowdown gathers pace. HSBC is also at risk from a strengthening dollar, with the broker estimating that the imperfect hedging may have reduced the group's equity tier one ratio by 5 basis points in the second half of 2008.

"At the current share price, we estimate a 10 per cent placing would add [around] 100 basis points to capital rations and be accretive to [net tangible asset values]," Cazenove said, adding: "Alternatively, we estimate cutting the dividend by 50 per cent would save a cumulative 91 basis points of regulatory capital over the [2009-2011 period]."

Overall, it was another uneventful day on the London market with thin volumes and little trading activity. The FTSE 100 closed up 6.47 points at 4,330.66, while the FTSE 250 climbed to 6,3091.57, up 83.9 points.

The collapse of the British Airways-Qantas merger talks was one of the main talking points of the day. Traders said that, in the absence of a three-way merger, calling off the talks made sense for BA, up 0.5p at 172.5p, as the deal with Iberia is likely to deliver more synergies.

Parts of the mining sector fell back as investors moved to bank profits from recent gains. Antofagasta, down 5.76 per cent or 25.75p at 421.25p, was the hardest hit after Société Générale switched its stance on the stock from "hold" to "sell".

Elsewhere, the private equity group 3i continued its recovery. It climbed 3.11 per cent or 8p to 265.5p, after Merrill Lynch weighed in on the recent capital and debt concerns with some words of support, saying that the valuation was now "beyond anomalous". The broker said: "While in current conditions 'never-say-never' is a good motto, we can see no reason why 3i should be forced to raise equity. We have looked at gearing, regulatory capital and, importantly, available cash and found no reasons why we should be concerned."

Wood Group was firm, gaining 1.7p to 200.5p, after Morgan Stanley moved the stock to "overweight" from "equal weight", saying that the risk-reward trade-off in the stock was now looking attractive. "The outlook for the European oil service industry has deteriorated in recent months. However, long-term prospects look healthier given the challenges on the supply side of the oil industry. Against that backdrop, we believe it is worth building/maintaining positions in selected oil service companies," the broker said, sticking to its 340p target price for the stock.

The household goods giant Reckitt Benckiser drew strength from a Deut-sche Bank note, rising almost 4 per cent, or 98p, to 2,608p. Analyst Harold Thomson said concerns about the impact of a revival at its rival Unilever were misplaced. "One of Reckitt's main management skills is to spot opportune trends and make profit from this. This attribute explains in large part why Reckitt is unlikely to suffer from a Unilever revival and supports out positive share stance," he said, reiterating his "buy" rating.

On the downside, the specialist distribution group Bunzl was down 4.54 per cent, or 27p, at 567.5p after Goldman Sachs added the stock to its widely followed "conviction sell" list in a new support services review. The broker said it saw limited prospects for any merger or acquisition activity around Bunzl and anticipated a "tangible slowing of growth in 2009".

On the second tier, Goldman boosted Regus, the workspace solutions group that was up 3 per cent, or 1p, at 51.5p after the broker reiterated its "conviction buy" rating, arguing: "We believe Regus (unjustifiably) discounts a protracted structural decline in end-markets."

Among smaller companies, Blue Oar was up 15.38 per cent, or 1.5p, at 11.25p after positing a defence document telling shareholders to ignore the unsolicited hostile offer from Evolve Capital, calling it "derisory, opportunistic and wholly inadequate".

Evolve, down 5.26 per cent or 0.5p at 9p, soon fought back, saying that "if Blue Oar shareholders really want to invest in building a high-cost investment bank which has been haemorrhaging cash, they should indeed reject the offer".

The first closing date for the offer is 1 pm on 30 December.

A 1930 image of the Karl Albrecht Spiritousen and Lebensmittel shop, Essen. The shop was opened by Karl and Theo Albrecht’s mother; the brothers later founded Aldi
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmA cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Arts and Entertainment
Flora Spencer-Longhurst as Lavinia, William Houston as Titus Andronicus and Dyfan Dwyfor as Lucius
theatreThe Shakespeare play that proved too much for more than 100 people
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
Arts and Entertainment
Stir crazy: Noel Fielding in 'Luxury Comedy 2: Tales from Painted Hawaii'
comedyAs ‘Luxury Comedy’ returns, Noel Fielding on why mainstream success scares him and what the future holds for 'The Boosh'
Life and Style
Flow chart: Karl Landsteiner discovered blood types in 1900, yet scientists have still not come up with an explanation for their existence
lifeAll of us have one. Yet even now, it’s a matter of debate what they’re for
Arts and Entertainment
'Weird Al' Yankovic, or Alfred Matthew, at the 2014 Los Angeles Film Festival Screening of
musicHis latest video is an ode to good grammar. But what do our experts think he’s missed out?
New Real Madrid signing James Rodríguez with club president Florentino Perez
sportColombian World Cup star completes £63m move to Spain
Hotel Tour d’Auvergne in Paris launches pay-what-you-want
travelIt seems fraught with financial risk, but the policy has its benefits
Arts and Entertainment
booksThe best children's books for this summer
Life and Style
News to me: family events were recorded in the personal columns
techFamily events used to be marked in the personal columns. But now Facebook has usurped that
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Business Analyst (Agile, SDLC, software)

£45000 - £50000 Per Annum + excellent benefits: Clearwater People Solutions Lt...

Finance Manager - Bank - Leeds - £300/day

£250 - £300 per day + competitive: Orgtel: Finance Manager - Accountant - Bank...

Compliance Officer - CF10, CF11, Compliance Oversight, AML, FX

£100000 - £120000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fi...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn