Macquarie downgrades HSBC and StanChart

On Tuesday analysts at Macquarie downgraded their recommendations on shares of HSBC and Standard Chartered.

The Australia-based broker lowered its recommendation on the former by two notches to underperform.

The broker thinks it may be the first big bank to break-up.

They set a price target of 520p.

“We would buy the breakup story but only after it becomes more certain. There is the risk that HSBC simply accepts to barely earn its cost of equity (CoE) just to keep the global empire together which would make HSBC a value trap we think,” analysts Thomas Stoegner and Ken Ang wrote in a research note e-mailed to clients.

Stoegner and Ang also lowered their view on shares of StanChart in the same note, downgrading them to underperform with a target price of 850p.

StanChart must restructure its business substantially or risk becoming a take-over target, they believe.