HSBC takes $1.1bn hit from Madoff-linked lawsuit, trimming capital ratio by 15bps

South Africa

South African equities retreated, with the Top 40 down 1.7% to 101,364.97 points and the All Share losing 1.57% to 108,707.33 points. Pick n Pay reported a narrower pre-tax loss of R317 million for the half year to 31 August, versus R1.1 billion last year, reflecting progress in its turnaround strategy despite competition from Shoprite. Moody’s affirmed Johannesburg’s credit rating, citing prudent financial management and a diversified economy despite governance challenges. Domestically focused investors will monitor this week’s money supply, credit, trade, budget, and producer inflation data for further insight into South Africa’s economic trajectory.

European Union

European stocks extended record highs, supported by optimism over easing U.S.–China trade tensions. The STOXX 600 gained 0.2%, with banks and tech rising 1.2%, though healthcare declined 0.5%. Novartis fell 0.9% after announcing a $12 billion acquisition of Avidity Biosciences, while Roche dropped 1.4% on a broker downgrade. HSBC closed flat despite booking a $1.1 billion provision linked to Madoff-related litigation. Overall market sentiment remained positive, buoyed by global risk appetite and resilient European earnings momentum, even as investors balanced geopolitical optimism with selective sector headwinds in healthcare and consumer defensives.

United States

Wall Street rallied to fresh records for a second session, driven by optimism over a potential U.S.–China trade deal and anticipation of strong tech earnings. The Dow, S&P 500, and Nasdaq all advanced, aided by a surge in Qualcomm shares after unveiling new AI chips. Market volatility, as measured by the VIX, fell to a one-month low. Investors expect the Federal Reserve to cut rates by 25 basis points this week, reinforcing risk appetite. Upcoming results from Microsoft, Apple, Alphabet, Amazon, and Meta will test the sustainability of the AI-driven equity rally amid cautious macro sentiment.

Asia

Asian markets traded steady as optimism over easing trade tensions kept sentiment buoyant. Japan’s new Prime Minister, Sanae Takaichi, met U.S. President Donald Trump in Tokyo to discuss defence and investment ties, while her government pledged fiscal support to offset the yen’s weakness. Hong Kong home prices rose 1.3% in September, marking six consecutive monthly gains, while South Korea’s GDP grew 1.2% quarter-on-quarter, the fastest pace in 18 months, supported by exports and consumption. Regional markets consolidated after strong recent gains, with investors awaiting major tech earnings to gauge sustainability of the global equity uptrend.

Currencies

The rand held steady, supported by improving global risk sentiment and expectations for a U.S.–China trade breakthrough. The dollar weakened ahead of central bank meetings, with traders pricing in a likely Fed rate cut and cautious optimism around President Trump’s Asia tour. Markets reacted positively to signs of progress in trade negotiations, although investors remain wary of limited deliverables. The yuan and other emerging-market currencies edged higher on improved growth prospects. Attention now turns to the Trump–Xi meeting in South Korea on Thursday, which could provide near-term direction for risk-sensitive assets and commodity currencies.

Commodities

Gold prices rebounded above $4,000 per ounce as a softer dollar and expectations of further U.S. rate cuts offset optimism around U.S.–China trade progress. Oil extended declines, pressured by reports that OPEC+ may approve another modest output increase in December. The prospect of higher supply countered support from improved trade sentiment. Meanwhile, Russia’s Lukoil announced plans to sell its international assets in response to Western sanctions, signalling longer-term structural shifts in global energy markets. Traders remain focused on this week’s U.S.–China talks for cues on demand recovery in the world’s two largest oil consumers.

Pick n Pay Stores Limited (PIK) -6.28%

Pick n Pay Group’s H1 FY26 results reflected steady execution of its turnaround strategy following recapitalisation in late 2024. Group headline losses narrowed 45.3% to R439 million, supported by a R227 million trading profit uplift and lower net finance costs. Turnover rose 4.9%, led by Boxer’s 13.9% growth and Pick n Pay’s 4.4% like-for-like gain. Gross margin improved 0.3% to 18.2%, aided by stronger sales mix and cost control. While Pick n Pay remains loss-making, store closures, margin recovery, and digital expansion underpin a methodical path to profitability, with full-year trading losses expected to stabilise.

Astoria Investments Limited (ARA) +35.44%

Astoria reported unaudited results for the quarter and nine months ended 30 September 2025, posting a net asset value per share of US$63.66 (ZAR 1 099.10), compared with US$61.99 at December 2024. Earnings recovered to 67.16 ZAR cents (US$3.81) per share, versus a prior-year loss. The board announced a conditional R8.15 per share repurchase offer and proposed delisting from the JSE and SEM, alongside a partial unbundling of Goldrush Holdings preference shares. The offer represents a 26.5%–35.6% premium to recent prices. Irrevocable undertakings covering 59.3% of votes support delisting, with funding provided from existing cash resources. No dividend was declared.

iOCO Limited (IOC) +0.95%

iOCO delivered a strong turnaround in FY2025, with adjusted EBITDA rising 68% to R516 million and operating profit up 275% to R421 million. Earnings per share improved to 40 cents from a prior-year loss of 10 cents, with headline EPS also at 40 cents. Free cash flow per share turned positive to 53 cents, while net finance costs fell 24%. Recurring revenue increased to 48%, reflecting benefits of decentralisation and cost rationalisation. Total revenue declined slightly to R5.58 billion. For FY2026, iOCO expects EBITDA of R580–600 million, recurring revenue above 60%, and free cash flow per share of at least 60 cents.

HSBC Holdings Plc (HSBA) 0.00%

HSBC will record a $1.1 billion provision in its third-quarter results after partially losing an appeal in a long-running lawsuit linked to Bernard Madoff’s $64.8 billion Ponzi scheme. The ruling by Luxembourg’s Court of Cassation ordered restitution to Herald Fund SPC, which alleged the bank failed in its custodian duties. HSBC plans to lodge a further appeal, noting the final financial impact may differ. The charge is expected to trim around 15 basis points from its CET1 ratio of 14.6%, with limited balance sheet impact. Shares dipped 1%, with sentiment tempered by ongoing litigation and its Hang Seng Bank acquisition.

Brown & Brown Inc. (BRO) -0.27%

Brown & Brown reported a strong third quarter, with adjusted earnings per share rising to $1.05 from $0.91 and total revenue climbing 36% to $1.61 billion. Commissions and fees surged 34.2% to $1.55 billion, reflecting resilient demand for insurance amid heightened climate, cyber, and geopolitical risks. The brokerage’s investment and other income nearly doubled to $56 million, supported by favourable rate conditions. Brown & Brown continues to benefit from its diversified client base and role as an intermediary offering multi-insurer coverage solutions. The sector’s steady cash flows and defensive profile reinforce its appeal in a volatile macroeconomic environment.

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