What is the impact of HSBC privatization of Hang Seng? 3 Teaching you to seize post-privatization investment opportunities

Source: HKEx Notice

Hsbc Holdings announced a solution to privatize another subsidiary, HSBC Bank, which shocked the financial markets. This is HSBC's largest Asian powerhouse since 2018. $HSBC HOLDINGS(00005.HK)$ Proposed Privatization $HANG SENG BANK(00011.HK)$ , and excluding other listed locations, at an operating price of $155, compared to the average market price of 33.1 per cent over the past 30 trading days, as reported by the Hong Kong Federal Exchange.

The news led to a drop in the stock market today, with HSBC rising by as much as 7% on the board to the left of $150 after the trend began to set. Analyze these M&A events from multiple angles to help them figure out other inclusion and operational strategies.

As Hong Kong's banking business has entered its maturity period and growth is at a slow pace, the opportunities for growth in banking are often due to acquisitions and acquisitions. Focus on HSBC in the next few years in simplifying its shareholding structure and consolidating its Asia business to boost profitability.

HSBC Privatizes Hang Seng Reasons

In the announcement of the privatisation, HSBC made clear that the unique advantages of the two brands of Toyota and HSBC will benefit from enhancing the ability of the hedge fund to grow in Hong Kong. It can be seen from the communication that privatisation is a surprise to the market, but in economics it is based on a typical acquisition combination, the aim of which is the cost of integration. Such comments are based on the example of short-term pain and long-term gain.

Source: HKEx Notice

In forex parlance, the Trade will see the exchange's CET1 capital ratio fall by 125 points and the Company's announcement will suspend repurchases of Stocks for three quarters. This news is one of the main reasons that led to today's plunge in the share price. Another reason is that the market sees a pause in the buyback of Stocks, will take a hit during the short term, while the main operational objective of companies is to restore their CET1 ratio to the 14.0% - 14.5% range after the cessation of buybacks. This error cannot be completely eliminated in the user's wake.

Source: HKEx Notice

What is the impact of HSBC privatization of Hang Seng?

Rather than face effects on the party's ability, people recognize that it is possible to overvisit the market. Privatization may reduce the profitability of choice, but with a smaller picture or reaction to profit growth, as banks with low ROE are only a one-time issue. According to the improvement in the quality of assets in the banking industry, the US slowdown is due to the improvement in the bad debts related to the Hong Kong Real Estate Industry. Looking back at the impact of the two major brands of Toyota and HSBC, the Operating Cash Flow is expected to improve in the long term. As recent research reports suggest that trading is associated with short-term pain, long distance speech is effective for FX controls. Without taking into account the synergy or cost optimization of the operating income agreement, it is possible to increase the underlying forecast by 1.5% and 3.1% respectively by eliminating the minority share rights of the parent company.

(Source:Corporate Ratings 丨 JPMorgan: Hsbc Holdings Privatization of HSBC Bank With Short-Term Pain, Preventing Long-Term Benefits)

The authors agree with the above report that the HSBC short line faces downward pressure on the unit number is reasonable, but if the market falls too much, there may be an opportunity for expansion.

From a technical analysis point of view, the share price is currently undertesting the support of the 50 antenna, and in the short term it is difficult to break the support of the 50 antennas completely satisfactory. However, if 50 antennas are missing, the next support is only a move below the bottom of the Yokok Range in late August or near the 100-antenna support at around $98, and does not represent the end of the entire medium-term uptrend.

How to deal with Hang Seng privatization?

In terms of options strategy, if investors want to Buy when switching back, the best strategy is toSell warrantsAs a master. This strategy benefits from the re-emerging correction in the price of a million shares, allowing options money to be raised, while buying stock stocks at lower prices, while waiting for the shortward trend to dissipate after the long line division.

For investors in stocks, the outlook is important. Bank shares are a good tool for earnings on long line investments. As mentioned in the article above, the effect of all privatization on whether or not there is a clear impact on long-term investments, the value of long-term investments does not change, and there are no problems with continuing long-term investments. If you want to reduce short line loss, another strategy can be usedCOVERCALL，Sell repurchase optioncallReduces losses caused by downward pressure on short-line stocks.

Hang Seng Privatization Investment Opportunities

From the point of view of short-line speculation, the opportunities presented by events do not have to be concentrated on HPC and Hang Seng. The former suffer from short-term negative sentiment; the latter, after the price skyrocketed to $150, the market also believes that the $155 privatization has a great chance of passing. Both do not necessarily have a decent amount of space for short-line operation.

Local Bank shares that do not have a direct undervaluation may have a negative value, but privatization on the same ground is not highly likely, without regard to the stock market relative to historical lows, and the increase in the risk of loss of account can also lead to an improvement in the environment. The appearance of a stock short line can be more noticeable. eg $STANCHART(02888.HK)$ 、 $BANK OF E ASIA(00023.HK)$ und $DAHSING BANKING(02356.HK)$ 。

In fact, the Group's share price has outperformed Hsbc Holdings this year, closing on October 9, rising 71.5% to the start of the year, far higher than the 44.6% expected. The current market share ratio is about 0.99¢, the share ratio is only 2cm to the left and the right hand side is about 5.1cm to the left.

It can be seen from the above data that in the short line segment, the value level of the market ratio and the improvement in the Industry environment are the main reasons. Profitability is a long-line investment only. As an example, today's decision is to buy a single stock to invest, or in the face of the operational risk of a number of stocks (such as M&A).

Moreover, as the Hang Seng Bank share price has risen today to near the private price of $150, shareholders whose investment target is not less than HSBC Bank, are looking for another type of investment. Sectoral funds may flow into other large-income sectors, such as public stocks, telecommunications stocks, or petroleum-based stocks. Here's a good look at today's Related Stocks, which are gaining momentum in the big markets.

$CLP HOLDINGS(00002.HK)$ $HK & CHINA GAS(00003.HK)$ $CHINA MOBILE(00941.HK)$ $CHINA TELECOM(00728.HK)$ $CHINA UNICOM(00762.HK)$ $CNOOC(00883.HK)$ $PETROCHINA(00857.HK)$ $SINOPEC CORP(00386.HK)$

Hong Kong High Dividend ETF

Given the prospect of an improving economic environment in the future, the improved quality of Assets and in line with the decline in the United States, higher shares or dividends are the investment choices that are wary of being overvalued by Technology stocks. For risk-averse investors who are less able to invest in an ETF, investors who aim to invest in the form of an ETF are more suitable. Using ETFs to invest in different types of stocks, avoiding the short-line fallout from the events of a single stock and lowering stock risk, is the true meaning of diversifying investments.

Consider the following Hong Kong stocks ETF, reusing Futubull AI to find out the working department of these ETF's investment objectives

$Hang Seng High Dividend 30 Index ETF(03466.HK)$ - ETFs that track the Hang Seng High Yield Index

$Global X HSCEI Covered Call Active ETF(03416.HK)$ $Global X HSI Covered Call Active ETF(03419.HK)$ - Tracking $Hang Seng China Enterprises Index(800100.HK)$ either $Hang Seng Index(800000.HK)$ COVERCALL ETF

$Bosera Soes High Div Yield Index ETF(03437.HK)$ - Track the CSD Red Bank Index

$CSOP Hang Seng Stock Connect High Dividend ETF(03469.HK)$ - Track Hang Seng Hong Kong Stock High Yield Low Volatility Index

Futu Securities, Chief Analyst, Hui Chi-Lok

(The author is a licensee of the Securities and Exchange Commission and its affiliates do not have any financial interest in the proposed issuer of shares)