Another researcher suspends HSBC ratings

Lonsec has become the second research house to suspend ratings on most HSBC Asset Management Australia (HSBCAMA) funds, following yesterday’s confirmation of its purchase by Challenger Financial Services.

Lonsec’s imposition of a blanket ‘fund watch’ rating on all HSBCAMA products mirrors Standard & Poor’s ‘on hold’ ratings of yesterday. However unlike S&P, Lonsec has not spared the Hong Kong-managed Chinese equity fund, which Challenger will continue to use along with HSBCAMA’s Asian equity fund as a springboard into international equities.

Lonsec said Challenger’s main motivation for the acquisition was picking up a listed property trust capability, but pointed out that HSBCAMA was near capacity in the asset class, reflecting concerns expressed to Money Management yesterday by InvestorWeb analyst Rodney Sebire.

Challenger’s only growth prospect in property was through the hybrid HSBC Strategic Property Trust, Lonsec said, but said the direct property input to the product was uncertain given its outsourcing contract with well-regarded Fortius Funds Management had just eight months to run.

One former HSBCAMA staffer said yesterday that Fortius boss Ray Sproats was “extremely loyal” to his outsource partner, and the relationship would probably not continue long term.

Lonsec was pleased that HSBCAMA’s property securities managers, John White and John Longo, had confirmed they would transfer to Challenger.