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In HSBC (HSBA, 790p) I see a strong, well managed, diversified global bank, with a higher exposure to the growth markets of Asia than its (now nationalised) compatriots on the London Stock Exchange.

I notice though the first significant signs of Chinese slowdown in the announcement on Thursday by Australia Iron Ore producer Mt Gibson (MGX, 71c)  that their Chinese customers want to delay shipments.

In their statement (link to co website) Mt Gibson say ‘ Customer and iron ore sector analysis indicates a slow down in demand for iron ore in China due to current economic uncertainty and the tightening of credit facilities’.

Whose ‘credit facilities’ I wonder, the Chinese or their Western customers? 

I also notice directors share sales at HSBC, wth a DD John, a ‘PDMR’ (senior manager but not group board member) selling 61434 shares at 907p on October 1st.

Reviewing other directors sales over the past twelve months I find  sales taking place at between 766p and 884p between October 2007 and June 2008 totalling around 400,000 shares or GBP 4m.  Directors who have sold include Hughes Hallett (non exec), Almeida (non exec), Green (Chairman), Flint (CFO), and Geoghahan (CEO). For full details go to www.digitallook.com or to the HSBC company website.

I wonder how long HSBC can weather the storm that banks in the rest of the world are currently embroiled in. I think the price levels at which share sales by six directors took place are a good indicator of a medium term peak level for HSBC shares.

Signal: Negative- Directors selling

Signal Strength: MEDIUM

October 17: Anecdotal information on the Chinese economy from a contact in Hong Kong:

Second largest Chinese port shows exports down 14% since July.

40% of the Chinese toy companies are now insolvent.

Also see: ‘Credit crisis casts gloom over China’s exporters’ (October 14th, Associated Press)

For subsequent comments on HSBC (November 10th and November 14th) see here.

 

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