Banking behemoth HSBC Holdings announced on Monday that it has agreed to purchased a majority stake, 51.02%, in Korean Exchange Bank. What this does is effectively increase HSBC's footprint in a new and emerging market, the Korean Peninsula.
"HSBC's presence in Korea is very small, compared with Citibank and Standard Chartered. So I think they needed some acquisition to have a meaningful presence in that market, and KEB is a good platform," said Paul Lee, a banking analyst with Tai Fook Research in Hong Kong.
"It reinforces the strategy to expand in the Asian markets through acquisition, if necessary," said Lee. "Korean Exchange Bank will be worth more under HSBC than with Lone Star due to banking synergies."
If you are looking for a value stock in an emerging market, KEB will be a good. While HSBC has wide exposure to the mortgage markets in the USA, it also is so well diversified that profits are not an issue. Therefore, they will increase KEB's efficiency and share price. Also keep in mind that China is expected to raise interest rates before the end of the year. How will this rise affect Korea is yet to be seen.
HSBC is aggressive, do not expect this to be the last you hear from them before the end of the year. I expect to see them take over other smaller banks in other emerging markets such as Central America and Eastern Europe. When the Beast is hungry he will eat.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment