Date
25 September 2017
HSBC will always have a surprise up its sleeve and the Chinese will lap it up every time they remember that the bank began in Shanghai 150 years ago this year. Photo: Bloomberg
HSBC will always have a surprise up its sleeve and the Chinese will lap it up every time they remember that the bank began in Shanghai 150 years ago this year. Photo: Bloomberg

HSBC finally lives up to its name

Hong Kong people have a complicated love-hate relationship with HSBC.

Many remain loyal to the stock and trust their life savings with the “big elephant”.

Never mind that in the past decade, HSBC has languished in the stock market as an unexciting proposition.

But what do Shanghai people think of HSBC?

This week, the London-based bank was the talk of the market again after it became the top southbound stock in Shanghai-Hong Kong Stock Connect, dominating the action for at least three trading days.

On Thursday, HSBC’s southbound volume accounted for more than 40 percent of turnover of US$606 million.

Still, that pales in comparison to the HSBC of old which accounted for more than 20 percent of the Hong Kong market before it was toppled by China Mobile, Tencent Holdings and China Construction Bank.

Mystery or destiny?

The answer might be in HSBC’s name.

Before acronyms became fashionable brand names, the bank answered to the very long-winded Hongkong and Shanghai Banking Corporation. 

It was a mouthful but it looked and sounded very colonial indeed.

But why the sudden passion for its colonial origins?

The answer might be in the impending interest rate hike in the US which is expected to lift the bank’s margins from the clutches of ultra low interest rates.

The self-proclaimed “world’s local bank” is resonating with rich investors.

The HSBC brand alone is probably a safe bet.

Over the years, the bank has weathered a lot financial storms.

Through all that, it has been steadfastly prudent as it passed from the aggressive Sir John Bond to the resilient Stephen Green and steady Douglas Flint, whose tenure has been marked by a tightening regulatory environment.

Perhaps another reason for HSBC’s newfound allure is the recent turmoil in the Chinese stock market.

With tougher margin financing regulations in the mainland, investors have been flocking to Hong Kong in search of better returns.

They’re finding HSBC a suitable target.

Then there’s talk that HSBC is planning a return to Shanghai. Investors across the border might be feeling nostalgic about the potential return of a prodigal son.

All of this is great for the stock but not good for everyone.

With Chinese money pouring into HSBC, other banks, especially Standard Chartered Bank, are finding themselves on the sidelines.

(StanChart sank to a multi-year low after it announced a 3.3 billion-pound rights issue.)

Meanwhile, HSBC will always have a surprise up its sleeve and the Chinese will lap it up every time they remember that the bank began in Shanghai 150 years ago this year.

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BK/DY/RA

EJ Insight writer

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