A much-anticipated strategic update continues the bank’s frustratingly slow pivot toward Asia, only with lower shareholder returns.
2 min
Another year, another familiar-sounding strategic update at HSBC. The behemoth’s need to reiterate its pivot to Asia underlines what a slow, awkward process it is.
The London-headquartered, China-focused bank announced full-year results on Tuesday. As at peers, revenues were hit by lower interest rates globally and chunky allowances for pandemic-related loan losses. Unlike at investment-banking rivals, the bump in trading revenues from HSBC’s own trimmed-back business was a meagre offset. A much-anticipated new strategy amounted to more of the same—except for lowered shareholders returns.
The shares fell in early trading, extending a year of underperformance. For much of the past decade the stock has traded at a premium to most European peers because of HSBC’s strong business in Hong Kong and mainland China, both profitable, fast-growing markets. But that gap has narrowed considerably in the past year, likely for two main reasons: Investors want faster organizational change, and they are concerned that HSBC’s trademark business model of bridging East and West is getting more difficult.
The bank broadly delivered on its 2020 targets. However, return on tangible equity or ROTE fell to just 3.1% from 8.4% a year earlier, and dividends were suspended at the British regulator’s request. The pandemic seems a valid excuse. The real disappointment was in its guidance for future returns. Target ROTE has been reduced and delayed, even with an additional $1 billion in cost cuts. Dividend expectations were pared back too: The growing quarterly payment has been replaced with a 40% to 55% payout ratio, possibly topped up with buybacks or special dividends.
Strategically, the bank is still focused on shifting more assets from Europe and the U.S. into Asia, as well as increasing its wealth management business and making its operations more digital. The direction of travel makes sense, but the pace remains frustratingly sedate, particularly as competition in the region is picking up. Discussions continue about long-mooted exits from retail operations in France and the U.S.
The speed of change might accelerate under Chief Financial Officer Ewen Stevenson, who was put in charge of the new overhaul. A relative outsider, he joined HSBC in 2019 from RBS, now known as NatWest, where he led a far-reaching revamp of what was once the largest bank in the world by assets.
HSBC’s shares are also weighed down by geopolitics. Management says little on the topic of Sino-American relations, except to highlight a long history of successfully bridging international divides. That discretion may be the best way to juggle conflicting priorities, but does little to assuage investor concerns that its dual identity may eventually become untenable.
The bank has no good answers to geopolitical questions, giving it all the more reason to address organizational ones. For a company that makes much of its position in exciting high-growth Asian markets, HSBC’s expected returns are surprisingly modest. For its shares to regain their old lustre, that needs to change.
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The U.S. now has more billionaires than China for the first time in a decade, driven by AI and a booming stock market.
3 min
The number of U.S. billionaires in the world reached 870 in mid-January, outpacing the number in China for the first time in 10 years, according to a snapshot of the wealthiest in the world by the Hurun Report.
The U.S. gained 70 billionaires since last year, powered by a rising stock market, a strong dollar, and the insatiable appetite for all things AI, according to the 14th annual Hurun Global Rich List . China gained nine billionaires overall for a total of 823. Hurun is a China-based research, media, and investment group.
“It’s been a good year for AI, money managers, entertainment, and crypto,” Rupert Hoogewerf, chairman and chief researcher of the Hurun Report, said in a news release. “It’s been a tough year for luxury, telecommunications, and real estate in China.”
Overall, the Hurun list—which reflects a snapshot of global wealth based on calculations made Jan. 15—counted 3,442 billionaires in the world, up 5%, or 163, from a year ago. Their total wealth rose 13% to just under $17 trillion.
In November, New York research firm Altrata reported that the billionaire population rose 4% in 2023 to 3,323 individuals and their wealth rose 9% to $12.1 trillion.
Elon Musk, CEO of electric-car maker Tesla and right-hand advisor to President Donald Trump, topped the list for the fourth time in five years, with recorded wealth of $420 billion as of mid-January as Tesla stock soared in the aftermath of the U.S. election, according to Hurun’s calculations.
The firm noted that Musk’s wealth has since nosedived about $100 billion, falling along with shares of Tesla although the EV car maker is benefiting on Thursday from Trump’s 25% tariff on cars made outside the U.S.
According to the Bloomberg Billionaires Index, Musk’s wealth stood at about $336 billion as of the market’s close on Wednesday, although measuring his exact wealth —including stakes in his privately held companies and the undiscounted value of his Tesla shares—is difficult to precisely determine.
The overall list this year contained 387 new billionaires, while 177 dropped off the list—more than 80 of which were from China, Hurun said. “China’s economy is continuing to restructure, with the drop-offs coming from a weeding out of healthcare and new energy and traditional manufacturing, as well as real estate,” Hoogewerf said in the release.
Among those who wealth sank was Colin Huang, the founder of PDD Holdings —the parent company of e-commerce platforms Temu and Pinduoduo—who lost $17 billion.
Also, Zhong Shanshan, the founder and chair of the Nongfu Spring beverage company and the majority owner of Beijing Wantai Biological Pharmacy Enterprise , lost $8 billion from “intensifying competition” in the market for bottled water. The loss knocked Zhong from his top rank in China, which is now held by Zhang Yiming founder of Tik-Tok owner Bytedance. Zhang is ranked No. 22 overall.
Hurun’s top 10 billionaires is a familiar group of largely U.S. individuals including Jeff Bezos, Mark Zuckerberg, and Larry Ellison. The list has France’s LVMH CEO Bernard Arnault in seventh place, three notches down from his fourth ranked spot on the Bloomberg list, reflecting a slump in luxury products last year.
Nvidia CEO Jensen Huang is ranked No. 11 on Hurun’s list as his wealth nearly tripled to $128 billion through Jan. 15. Other AI billionaires found lower down on the list include Liang Wenfeng, 40, founder and CEO of DeepSeek, with wealth of $4.5 billion and Sam Altman, CEO of OpenAI, with $1.8 billion.
Also making the list were musicians Jay-Z ($2.7 billion), Rihanna ($1.7 billion), Taylor Swift ($1.6 billion), and Paul McCartney ($1 billion). Sports stars included Michael Jordan ($3.3 billion), Tiger Woods ($1.7 billion), Floyd Mayweather ($1.3 billion), and LeBron James ($1.3 billion).
Wealth continues to surge across the globe, but Hoogewerf noted those amassing it aren’t overly generous.
“We only managed to find three individuals in the past year who donated more than $1 billion,” he said. Warren Buffet gave $5.3 billion, mainly to the Bill and Melinda Gates Foundation, while Michael Bloomberg —ranked No. 19 with wealth of $92 billion—gave $3.7 billion to various causes. Netflix founder Reed Hastings, ranked No. 474 with wealth of $6.2 billion, donated $1.1 billion.
