Star British fund manager Neil Woodford sold his fund's stake in HSBC last month, citing concerns about the impact of potential fines from several industry-wide investigations on the banking group.
Banks in Europe and the United States have been fined for a variety of transgressions as regulators increase their scrutiny of financial institutions.
Two of the most high-profile and wide-reaching of the investigations concern the setting of interest rates between banks, specifically the London Interbank Offered Rate (Libor), and the fixing of currency rates.
"I am worried that the ongoing investigation into the historic manipulation of Libor and foreign exchange markets could expose HSBC to significant financial penalties," Woodford said in a blog posting on his fund's website.
"Not only are these potentially serious offences in the eyes of the regulator, but HSBC is very able to pay a substantial fine," said Woodford, who built a near cult-like status during more than 25 years at Invesco Perpetual. He left in April to set up Woodford Investment Management.
Asked about Woodford's share sale, HSBC said it had no comment to make on the matter.
While Woodford is not the first to advise caution on the sector after a flat start to the year for the STOXX Europe 600 Bank sector following a gain of nearly 70 percent over the previous two years, investors pay close attention to the bets of such high-profile fund managers.
Sell-side analysts retain a consensus "buy" recommendation on HSBC stock, which currently trades at 1.1 times book value, above the 0.9 times sector average, data from Thomson Reuters StarMine showed.
Comments
Comments are closed for this article.