Berenberg upgrades HSBC to 'hold'

Berenberg noted that its downgrade of the stock to ‘sell’ in November did not foresee the current global pandemic.

"We believe risks from loan losses are material, but manageable, and that near-term earnings headwinds may be exacerbated by the upfront cost of further actions to reduce expenses, which we believe are necessary.

"However, while HSBC remains far from cheap, its 35% discount to tangible book value is comparable to historical troughs and better reflects our FY 2022E return on tangible equity of 6.7%. As a result, we believe risks to HSBC's share price are now more balanced."

Berenberg also pointed to HSBC’s "favourable" footprint in faster-growing markets, which it said distinguishes the bank from many peers.

"Given this, and perceptions that these markets may recover from COVID-19 sooner than developed markets, we are mindful of the potential for HSBC to outperform peers in the short term. We believe HSBC may struggle to benefit from these trends, but that such perceptions may limit downside."

Berenberg cut its price target on the stock to 390p from 430p, largely reflecting lower earnings expectations.

At 0940 BST, the shares were down 0.9% at 400.80p.