HSBC Holdings P L C (HSBC)

It's low now, so he'd lean into buying it now. All European financials have suffered. He sold his shares years ago. It's one of the biggest banks on the planet with strong exposure to Asia. It will be in better shape next year. Pays a 6% dividend

This company has substantial emerging market exposure, where there is growing pain economically – like Greece, Spain, etc. He would stay away. If you want bank exposure, he would recommend the US ones. Where there is growing pain economically – like Greece, Spain, etc. He would stay away.

Trump has made this trade off for no good reason. 40% of earnings come out of Europe where the economy is doing fine. Great balance sheet. They'll likely raise the dividend. Another 40% of earnings come out of Hong Kong which is pegged to US interest rates, which in turn will rise. A great global franchise. Smart management. Attractive at these levels. (6% dividend, Analysts' price target: HK$79.63)

After the global financial crisis, all banks under-earned because interest rates came down so far. As interest rates come back up, financials are starting to approach their historical earnings range. Banks in the US and Canada are leaders in this pack. European banks are a bit behind. 40% of HSBC’s business is in Europe, which has yet to see higher interest rates. 40% is in Hong Kong, which is the booking point for Asian business. Because the Hong Kong dollar is pegged to the US dollar, this part of HSBC’s business is pegged to the US interest rate cycle. Higher interest rates in the US are good for HSBC in Asia. He thinks the global banks are undervalued, and are good buys, especially for people with a multi-year horizon. This is not a good trade for 3-to-6 months but he thinks it will do well for someone willing to hold it for 3-to-5 years.

He has problems with this company due to regulatory concerns. A lot of European banks have not been properly recapitalized, may have high leverage, and the balance sheets may be impaired. He would take profit and re-invest in North American banks. Yield 4.5%.

He doesn't like this one. The dividend is secure. It’s a massive behemoth bank, but has been struggling to drive earnings growth for years. There's been no organic growth. They may have to make an acquisition, but acquisitions are not cheap these days. If you want to own banks, you are better off owning Goldman Sachs (GS-N) or Morgan Stanley (MA-N). There are better investments elsewhere.

50-60% Hong Kong plus international. Over a 5% dividend. You get 10% plus the dividend for a few years. You get diversified away from North America. (Analysts’ target: $43.96).

This has 2 major franchises. There is the European, but the largest franchise in terms of earnings is Hong Kong. Hong Kong rates are pegged to the US rates. There is also the insurance business as well as a number of other things. Balance sheet is very good and he sees good upside here.

One of the big drivers is Asia. The headquarters for the Asian business is in Hong Kong. Hong Kong interest rates are pegged to the US interest rates. When the US raises interest rates, so does Hong Kong. You have a high growth region where money is sloshing over the border from China and into loans, so there is a lot of growth here. The British portion will right itself so that is good. There is an opportunity to grow the insurance business as well. Global recovery is going to be good for this bank. A good, safe way to play multiple jurisdictions.

It is a global bank, exposed to China, North America and the UK. They are doing extraordinarily well in Asia. They are very well placed for changes in banking in China. He expects them to do well there. We will see a new CEO coming in and it will be interesting to see what he does with the bank going forward. It is a safe investment at these levels.

HSBC-Q vs. AMTD-Q. The TD business is a better long term holding than HSBC. They have been benefiting from the globalization of China but have not been investing long term in their regional offices. TD has a growth opportunity with independent advisors. It is a better long term risk reward.

Thinks it has a discount from BREXIT on it, but is very exposed to Asia, which is a real growth driver. Its key market is based in Hong Kong, which is pegged to the US$, giving US leverage on the interest rate rise. It has a China credit card business, which is new, because China is a closed credit card market. Has a very attractive dividend. It will benefit from rising interest rates as Net Interest Margin, a critical driver of buying profitability, will need to rise by 70% to reach pre- crisis levels. (Analysts’ price target is $41.22.)

A huge global bank. Have had some difficulties with world authorities about money laundering, and were implicated on a big scale. He was told that they have cleaned up their act, but as an outsider, it is impossible to know. One of the most widely held non-North American banks you can buy.

Between March 30 and August 10 is the optimal time to be buying and holding this. It has had an average return of about 7.7% over the benchmark, and has been positive in 14 of the past 17 years. This year it had a low of about $39 in April all the way to a high of about $50 just before August, a phenomenal run. We are beyond its period of seasonal strength, but there are still higher highs and higher lows technically. This is not something he would venture into, but would go into other financial companies instead.

If looking at European banks, Banco Santander (SAN-N) or HSBC Holdings (HSBC-N) are two that he would consider.