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Sell advice from its joint house broker sent HSBC to a 17-month low on Wednesday.

Credit Suisse turned negative on the stock, having been positive since June 2012. Profit forecasts are “still significantly too high”, as HSBC’s opaque reporting structure makes investors overly optimistic about profitability of the core franchise, it said.

Without planned disposals, HSBC’s core revenue last year was 7 per cent lower than the reported figure, with previous years showing even wider variations, said Credit Suisse. Underlying, HSBC’s actual sales growth in 2011 and 2013 was just 1.5 per cent, it estimated.

Weaker Asian economies spelt further earnings risk while the UK regulatory burden made improved cash returns unlikely in the next two to three years, said Credit Suisse. It put a 580p target on the stock, which fell 1 per cent to 591.8p.

The wider market drifted lower as the Budget was slowly digested, with the chancellor’s abolishing of compulsory annuity purchases prompting a switch from insurers to asset managers. The FTSE 100 ended off 32.15 points or 0.5 per cent at 6,573.13. Legal & General led the fallers, sliding 8.4 per cent to 211.2p.

Hargreaves Lansdown was up 14.5 per cent to £15.04 and Barclays rose 2.3 per cent to 241.5p, with the latter also supported by more talk of shrinking its investment bank.

“We don’t see how Barclays can continue to allocate half its capital to a business that continues to earn sub cost-of-equity returns,” said JPMorgan Cazenove. To balance returns, Barclays needs to cut a further £1bn of costs and shrink by £40bn its £221bn in risk-weighted assets, the broker forecast.

BAE Systems rose 1.4 per cent to 413.5p after management gave a positive update to UBS analysts.

BAE’s US sales should trough this year while services revenues will improve as Saudi Arabia’s jet fleet grows, UBS said. With customer prepayments also bottoming in 2014, the improving cash flow meant BAE will have the capacity to return up to £500m to shareholders every year, the broker added.

Smiths Group fell 3.7 per cent to £13.01 after the engineering conglomerate announced another phase of restructuring, which began in 2009. Earnings missed market forecasts due largely to an unexpectedly poor performance of Smiths Medical, which it has twice chosen not to sell.

“The weakening Medical outlook and legacy liabilities make a break-up, the hope of some investors in our experience, increasingly unlikely,” said RBC.

Ophir Energy sunk 14.8 per cent to 251.7p after its first pre-salt exploration well in Gabon failed to find oil. Analysts had valued the high-risk prospect at about 20p per share based on a 15 per cent chance of success.

Chip designer Imagination Technologies, among the most-shorted large-cap stocks, was squeezed 10 per cent higher at 180.7p on a UBS upgrade to “buy”. With Imagination’s market share falling below 50 per cent, the supplier promiscuity among its potential customers turns from a threat to an opportunity to regain ground, UBS argued.

Victrex, the polymer maker, rose 6.7 per cent to £19.68 after Citigroup turned positive. A more focused strategy will deliver volume growth in 2014 after two years of stagnation, it forecast.

Copyright The Financial Times Limited 2017. All rights reserved.

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