The misplaced love for HSBC

Ben Kwok September 23, 2020 09:55

Put the clock back 25 years ago when I started my first job at Hong Kong Economic Journal. A lot has changed since but what remains the same is I am back to where I was.

Well, so is the share price of HSBC.

After falling more than 50 per cent this year, HSBC dipped to a low level it has not seen since 1995 because of a variety of geopolitics reasons in United States, United Kingdom and Hong Kong, where the bank has listing.

The beloved bank, which its Hong Kong fans like to address as “lion” or “elephant” has become an underdog that most analysts came short of any positive stories.

At around HK$28, the right issue price when it last asked its shareholders for capital in 2009, HSBC dipped below most analysts’ estimates in the worst scenario.

With a market capitalization of HK$590 billion, HSBC is nearly only one tenth of Alibaba Group, the largest listed stock in Hong Kong.

This is not good news for Ping An, which first disclosed that it owned more than five per cent of HSBC in 2017. The insurer owns about seven per cent of the bank.

While Ping An is sitting on huge losses from its HSBC stake, the situation is in sharp contrast to HSBC, which made a handsome profit when it sold its Ping An stake in 2012 after a decade-long investment period.

A lot were said about how awkward HSBC has been caught between the United States and China and seems incapable to make anyone happy.

Global Times said Beijing will put HSBC on the list of “unreliable entities”, noting that HSBC was colluding with the United States to frame Huawei.

To be fair, HSBC counterparts in London also saw their shares halved this year, so were the British hongs in Hong Kong, which all suffered severely from the economic shutdown due to covid-19 this year.

The road for HSBC is tough. But peace, as in the Chinese name of Ping An, be with the HSBC shareholders.

-- Contact us at [email protected]

Ben Kwok

EJ Insight writer

Hong Kong

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