LONDON (ShareCast) - (ShareCast News) - There are two clear options for British investors wanting to partake of the fruits of Asian economic growth and The Times's Tempus was very clear about which one was the likely winner.


HSBC and Standard Chartered both have major operations in the Far East, the tipster said, even if the two were listed and had their headquarters in London, and although the former might look like the safer bet for investors, in the long-run the latter was likely to have the edge according to Patrick Hosking.

Despite HSBC's promise of a $2.5bn share buyback, the bank was forced to defenestrate its progressive dividend policy and chief executive Stuart Gulliver downgraded the lender´s target for its return on tangible equity for a the second time.

Good news had also been few and far between for Standard, after its boss Bill Winters reneged on his commitment of an 8% return on equity target, stating that it will "likely take us longer".

The contrast between the two banks could not be any more stark in terms of their planned turnarounds, with Gulliver currently struggling to discard the image of HSBC as being too big for its own good, and Standard suffering a more acute fall from grace in recent times.

As an operation, Tempus believes Standard to be much more sound, given recent successes in slashing its underlying costs and in shedding unwanted assets.

While HSBC lifted its impairment provisions by 64% to $2.4bn, Standard cut its provisions by 34% to $1.1bn.

Scandals have tarnished HSBC's reputation considerably in recent times and the lender's top two executives would likely not be there in two years´ time.

Standard's top executives on the other hand are beginning a new cycle, with Winters coming on board a relatively short time ago and Jose Viñals due to take over as chairman in the coming months.

Buy StanChart and sell HSBC, Tempus advised.



HSBC´s decision to buy-back $2.5bn-worth in shares was wrong-headed, the Financial Times´s Lex column said.

Yes, the programme only equals 2.0% of the lender´s market capitalisation, but the times call for hardheadedness, Lex argued.

Expectations for the progressive dividend to be maintained were always questionnable and now HSBC says it will be scrapped next year - along with its target for double-digit returns on equity.

Be that as it may, if it wants to maintain its 51 cent per share dividend payout then a little cash would come in handy, the FT´s corporate finance wonks mused.

The alternative would be to draw on retained earnings, which requires a 'thumbs-up' from the regulator or paying in shares, thus diluting any buybacks.

Furthermore, earnings continue to slide as growth in Asia slows, even if by less than in the rest of the world.

Management should focus instead on what HSBC claims to offer investors - diversification, relatively stable profits and payouts.

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