Sharecast - "We believe the China/HK re-opening and capital return prospects of HSBC (LON:HSBA) are underappreciated attributes which create positive return/risk asymmetry and move us to buy on the name," Jefferies said.
Jefferies pointed out that 37% of loans and 36% of pre-tax profit are attributed to China & HK and said it expects a re-opened economy to drive higher loan demand and general activity, which should benefit HSBC.
"HK and mainland China have modestly higher net interest margins for the group, so a pick-up in loan growth in these regions should be accretive to the group," it said.
Jefferies also said it now estimates that the sale of the bank's Canada business can unlock $14bn of buybacks and special dividends across 2023 and 2024 and sees credible re-rating potential given estimated 13% return on tangible equity in 2024 against 0.8x TBV today.
At 0930 GMT, HSBC shares were up 2.3% at 555.80p.
