HSBC upgraded to 'buy' by Investec

22nd Jun 2015 10:45

Investec upgraded HSBC to 'buy' from 'hold' and raised the price target to 635p from 620p.The broker said HSBC's eagerly-anticipated investor day on 9 June left the market a touch underwhelmed. "We would characterise it as a promise of 'more of the same', i.e. sustained (high-return) growth in Hong Kong/Asia to offset decline elsewhere," said Investec.However, Investec said it was positively encouraged by HSBC's investor day, which exceeded its modest expectations of any "strategic reset"."We think it is encouraging that market conditions appear likely to facilitate an (economic) acceleration of planned risk-weighted asset reduction within legacy portfolios that, for now, remain dilutive of group returns," said Investec."Moreover, we similarly welcome the planned exits from Brazil and Turkey - less material in group terms, but in our view, likely to have remained a long-term drag on returns."As a result, minor upgrades add 15p to the broker's price target, which, with a 5% share price pullback and 5.4%-6.1% implied dividend yield for 2015-17, drives the upgrade to 'buy'.Royal Bank of Scotland, which is rated at 'buy', remains Investec's top pick in the sector.At 10:52, HSBC shares were up 1.3% at 598.60p.