StanChart slumps on Investec downgrade

It noted the stock has rallied 17.2% in just two days, to within 2% of the brokerage’s unchanged 460p price target, having hit a fresh 21st Century low of 387p on 11 February.

Aside from that though, Investec said nothing much has changed.

“As such we now are forced, somewhat hastily, to recommend that investors take profits (or cut losses).”

It said the fact StanChart continues to trade below its 465p November 2015 rights price is “merely a footnote in history”.

“We happen to believe that Standard Chartered’s capital position will now prove adequate, supported by significant ongoing balance sheet de-risking initiatives.”

Investec expects the bank’s CET1 capital ratio to strengthen to 13.9% in 2017 from 12.9% in 2015, but said it was the weak earnings outlook constraining its enthusiasm.

“We think that the outlook for impairments remains highly uncertain, with extreme volatility in the oil price seemingly driving sudden short-term moves in sentiment and/or expectations,” Investec said.

It sees better value in buy-rated Aldermore, Barclays, HSBC, Lloyds, OneSavings, RBS, Shawbrook and Virgin Money.

StanChart was also hit by a downbeat note from Morgan Stanley, which kept its ‘underweight’ stance on the stock.

It said the asset quality outlook for Asian banks has worsened since StanChart’s strategic review, noting slowing economies, and lower commodity and property prices.

At 0913 GMT, StanChart shares were down 5.6% to 427.55p.