HSBC: what would happen in Asia?

HSBC Holding announced that they would seek $17 share issuance and stop loan and mortgage applications in the US. It was widely speculated that HSBC would seek more capital but the removal of loan and mortgage is somehow a surprise.



HSBC started in Hongkong and made handsome profit during the late 90s and early 00s in this area even though they were not as profitable in other regions as in Asia, largely due to China's explosive growth. Rough competitiveness alslo plays an important role when gaming in other more advanced markets, e.g., US and EU. So the roadmap of HSBC is use Asian's gain to offset other losses.



In all, they can proudly claim that they don't need goverment capital in 2008-2009 financial crisis. But this time, HSBC seems miss this play by a wide margin because US's loss took a big toll in their overall performance while Asian is really slowing down in exporting goods. When there is no immediate help from the Asian market, HSBC suffers as their peers.



So what can we digest out of HSBC's move? Two folds, I think. First, Asia is really in trouble while the growth is losing steam. Such slow down can't be immediately return to norm due to slowed export. If HSBC suffers, how about others with heavy US and EU investments? There is only one answer, down. These firms should be avoided. Second, those banks and financial firms without US/EU investments are supposed to sustain less damage, although they're slowed down. Headwind is for all and it is much better than something dragging your down further. These firms can be still very valuable investments.