HONG KONG, Oct 05, 2007 (XFN-ASIA via COMTEX) --
CLSA said HSBC Holdings' recent rally will not last as current earnings are disappointing and the outlook for future earnings is not bright.
The brokerage has a "sell" call on the bank with a target price of 114 hkd. However, the report did not say what its previous target price was.
"At current levels we are close to similar levels before the bank made its disclosure on sub-prime loan problems late in 2006 and only 8 pct off all time highs," CLSA said, adding that HSBC is just entering a provision cycle.
It noted that shares in the bank have gone down quite considerably -- from 30-50 pct historically -- during times of rising provisions.
It noted that its balance sheet risk is higher with equity-to-assets now at 5.6 pct, compared with 6.8 pct in December 2000 and 5.7 pct in 1997.
It added that the market will be watching the third-quarter results of the bank's unit HSBC Finance and HSBC USA next month.
HSBC closed up 1.8 hkd or 1.21 pct at 150.8 today, rising for the fourth consecutive session.
