Global financial major HSBC (NYSE:HSBC) (GB:HSBA) is selling its banking unit in Argentina to Grupo Financiero Galicia in a deal worth $550 million. The move, part of HSBC’s Asia pivot, is expected to result in a pre-tax loss to the tune of $1 billion for HSBC in the first quarter. The company is slated to report its Q1 numbers later this month.
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Furthermore, HSBC expects to record cumulative foreign currency translation reserve losses of about $4.9 billion in its income statement at the closing of this M&A transaction. The Argentina operations are largely a domestically focused business. Noel Quinn, the Chief Executive of HSBC, expects the deal to be an enabler for HSBC to focus its resources on higher-value opportunities across the company’s international network.
HSBC’s Asia Focus
Importantly, the deal is part of HSBC’s overarching strategy to focus on the rapidly growing Asian markets. So far, the pivot has included HSBC offloading some of its operations in North America and France. Concurrently, it has been setting up a presence in India, Singapore, and China. According to Bloomberg, HSBC is also looking at offloading some of its businesses in Germany.
What Is the Stock Price Forecast for HSBC?
Over the past year, HSBC’s London-listed shares have gained by nearly 24.5%. Overall, analysts have a Hold rating on the stock, alongside an average HSBA price target of £744.35. This points to a 15.2% potential upside in the company’s share price.
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