Goldman Sachs sends HSBC tumbling, Barclays follow

HSBC (HSBA.L) stocks tumbled 4.8 percent after Goldman Sachs downgraded the largest bank in Europe from “neutral” to “sell” and slashed its target price from 950 to 650, making HSBC one of the biggest decliners on the FTSE 100 along with Barclays.

Goldman Sachs report on European banks stated that recent action’s by policymakers across the globe has eroded the outperformance of HSBC, which has relatively strong liquidity and capital position.

The report continued to say: “Our fundamental view on the sector is that the focus will move from liquidity concerns to on balance sheet lenders as the credit cycle deteriorates, which is where our key concern exists for HSBC. If the market continues to focus on franchise strength and ignores underlying earnings trends, then HSBC is likely to continue to outperform.”

The announcement by Barclays that they have possible plans to take a cash injection from the Middle East including Abu Dhabi and Qatar, sent shares plunging down 9.1 percent, the UK bank said they may broke the deal to avoid taking the government rescue cash.

Source: uk.reuters