Monday 2nd: Europe is wild & crazy, sometimes

Discussion in 'General Trading Discussion' started by WaveWage, Nov 3, 2015.

  1. WaveWage

    WaveWage Well-Known Member

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    HSBC, Commerzbank, the Markit PMI doing better than expected: are Europe just hard to follow, or fully surprising? Let's try to decipher that European market of Monday.


    Firstly, HSBC Q3 earnings showed a rise of 32% from a year ago with a pre-tax profit rise of $6.1 billion. Commerzbank, an important lender bank in Germany, showed a pretax profit of $442 million, instead of $384 million that was expected by analysts. I must admit I'm shocked of these results. Despite that, HSBC finished down -0.8%.


    The PMI (Purchasing Managers' Index) of Europe from Markit is also higher than expected, with 52.3 at October compared to 52 at September. A number above 50 means it is going positively.


    The numbers:
    FTSE 100 is up +0.01% or +0.71 pts (that's not much), with a fall at the opening and then recovered afterward, at 6,361.80 pts. DAX 30 is with +0.93% or +100.53 pts at 10,950.67 pts. CAC 40 is as well on the positive territory with +0.38% or +18.55 pts at 4,916.21 pts. Finally, Spanish IBEX 35 got +0.55% or +57.50 pts at 10,418.20 pts.
     
  2. Susimi

    Susimi Senior Investor

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    It's interesting that HSBC's profits are up at 32%.

    They just announced that their branch in my old town is due to close early next year. With the rise in profits I honestly wonder why they made that decision, or if they will reverse it.
     
  3. WaveWage

    WaveWage Well-Known Member

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    Profits can be up for two reasons: revenues are higher or operating costs are lower, if not both. Obviously, they probably closed down your branch at your town to drive down costs and effectively making more margins. After all, having a lot of revenue but not using it right is as stupid as not having revenue at all. Well, no, because in the former you can often fix costs, while in the latter you would probably have to find a market and spend to start your business.


    So I'm a bit surprised of their results, as you can be, but not of the fact they restructure themselves.
     
  4. Susimi

    Susimi Senior Investor

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    Thinking about it, this is probably the reason for their closure of my old towns branch. The town is not that big in size and it was probably seen as not generating as much business. It is a shame though because it was handy having a branch there.
     
  5. WaveWage

    WaveWage Well-Known Member

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    That's the whole thing with efficiency: it's not always fair, but it tries to still satisfy costumers. If there's one another branch at 15 mi around you, in fact, nothing really severe happened and many people still have access to the bank, just elsewhere and by using the car. Not the best solution but nothing that would make you leave the bank at the time.


    However, in banks, proximity matters a lot because customers tends to take the nearest bank, doesn't matter the bank's brand. Only the people who compares are not affected by the proximity (investors are likely to compare because their business depends of the bank).
     

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