Record rights issue attracts retail investors to HSBC

Angus Rigby, Chief Executive Officer, TD Waterhouse comments: "The number of our customers buying shares almost doubled those selling this week as investors continue to take advantage of volatile market conditions.

"The focus remains on the hugely volatile banking sector and it's no surprise to see HSBC leap into the top ten buys when its share price plummeted by 19% on Monday. The UK's biggest banking group is not a regular in our trading tables, but the news that the bank is turning to shareholders to raise a record £12.9bn has brought it onto our customers' radar screens.

"HSBC shareholders, including Hong Kong's richest man Li Ka-shing, have pledged to help the bank achieve at least 40% of its rights issue, which is the biggest on record for a corporate bank. Following a disastrous $6.8bn loss in its US personal finances services division for 2008, the bank plans to wind down business at its HFC and Beneficial consumer lending units. Our customers may see some upside in the longer term, despite the ongoing short term volatility in the sector.

"Meanwhile share prices in the property sector have risen slightly, and it looks like some of our customers have taken the opportunity to cash-in and take profits. Both Taylor Wimpey and Barratt Developments enter the top ten sells this week.

"Taylor Wimpey faces prolonged refinancing discussions following a formal three week bondholder approval process. The house-builder has been meeting with its banks to agree terms of a proposed £1.55bn debt restructuring plan.

"Rival house-builder, Barratt Developments, wasn't far behind in the top ten sells after a drop in operating profit margins and a write-down of almost half a billion pounds-worth of assets left the company with a staggering £592m pre-tax loss for the final six months of last year.

"Hampered by a 9.7% drop in average house selling prices the house-builder was forced to make aggressive discounts to its property, resulting in a mere 1.3% margin on sales (before exceptional items) during the period, compared to 17% in the same period last year. However, the company's heavy discounting paid off as it generated enough cash to clear £228million off its net debt, causing shares to climb to a 94p high (on 4 March 2009)."