Sector movers: HSBC weighs on the banking sector

27th Feb 2012 15:46

Banks were the worst performers on Monday afternoon after the full-year results from heavyweight constituent HSBC were met with a negative reaction on the markets.Shares in HSBC were down 4.6% at 548,3p despite reporting what was initially seen as a decent set of figures, with reported pre-tax profits coming in at $21,782m, ahead of expectations and up from $19,037m the year before. It was, however, boosted by favourable fair value movements of HSBC's own debt to the tune of $3.9bn. Nevertheless, the figure surpassed all other western banks that have issued their 2011 results in the year-to-date.Nomura kept its buy rating and 725p target price on the stock, saying that the results are "supportive of our investment case".One of the key points of the results, Nomura says, was the Hong Kong performance as it has recently been the focus for the bears. Profits were up 2% on revenue up 5%. Revenue was 3% lower in the second half than the first, but the broker says that it was cautious that these trends could have been more negative. However, Chief Executive Officer Stuart Gulliver told reporters that it would be a "challenge" to achieve the cost-to-income target of 48-52% by 2013 as a result of the tough economic outlook, according to Reuters.Sector peers RBS and Lloyds were also out of favour with the Financial Times reporting that the two banks are looking to tap the ECB's Long-Term Refinancing Operation on Wednesday for a combined €15bn. Heading the other way were tobacco stocks, with British American Tobacco being given a boost by some positive broker commentary from Nomura and UBS.Nomura reiterated its buy rating and raised its target price from 3,320p to 3,360p this morning to reflect encouraging trends in terms of market share gains and improving margins.Meanwhile, UBS upped its target price from 3,185p to 3,350p and kept its buy rating. "We believe that given the industry's strong pricing power, resilient market volumes, market leadership position in many of their profit centres, geographic diversity, increasingly strong brand portfolio and significant cost saving programme that the outlook for further above average earnings growth appears low risk and sustainable for many years," analyst Jonathan Leinster said. Sector peer Imperial Tobacco was also on the rise.BCTop performing sectors so far todayForestry & Paper 6,349.72 +1.55%Tobacco 36,444.66 +0.69%General Retailers 1,705.02 +0.45%General Industrials 3,235.61 +0.40%Fixed Line Telecommunications 2,466.11 +0.27%Bottom performing sectors so far todayBanks 3,923.60 -3.62%Automobiles & Parts 5,375.21 -2.38%Personal Goods 21,509.61 -2.13%Media 4,263.07 -1.86%Electronic & Electrical Equipment 3,386.34 -1.76%