Berenberg upgrades HSBC to 'buy'

Berenberg upgraded HSBC to ‘buy’ from ‘hold’ on Wednesday, keeping the price target at 780p, as it said the bank’s return on tangible equity of around 13% and attractive growth potential are undervalued.

"HSBC’s footprint is structurally attractive," Berenberg said. "As well as providing the bank with access to faster-growing markets, HSBC’s global presence means it is well placed to provide high-returning transaction banking services for global corporates.

"This structural strength was previously eclipsed by cyclical headwinds and uncertainty related to HSBC’s restructuring. More recently, however, higher interest rates have supported HSBC’s returns and risks from restructuring are now modest."

Berenberg said that strengthening activity, particularly in Asia, provides further cyclical support, and growth can be supported further by the bank’s recent investments.