Major Chinese Investor Ping An Increases Stake In HSBC

The decision of China’s Ping An Asset Management of increasing its stake in struggling British lender HSBC has provided a much-needed vote of confidence. The Chinese investor is the largest one of the bank.

This came at a time when the bank was caught in the cross hairs of rising diplomatic tensions between the United States and China and amidst renewed criticism of its lack of adequate corporate government and banking oversight to prevent money-laundering and complying to procedures to prevent illegal money flowing through it.

There was almost a 9 per cent jump on Monday in the shares of the bank that is head quartered in London but makes a large proportion of its profits in Hong Kong and China following the revelation of the news of the increased stake in the bank being taken up by Ping An – to 8 per cent from 7.9 per cent.

Last week, the shares of the bank slumped to a 25-year low and the spike in its stock price was a very welcome move for the shareholders of the bank. The shares of the bank plunged last week after the FinCen files leak in which the bank was accused of not being able to prevent money-laundering. The information in the documents was “historical”, HSBC has said.

So far this year, the share price of the bank have almost halved despite Monday’s rise as the bank was caught in the cross fire of the tensions between the US and China which could severely damage the business of the bank according to some analysts.  

The Chinese government is considering the inclusion of HSBC in its list of “unreliable entities” or companies – which is a list of entities that have supposedly harmed China’s interests, China’s state-run media has reported.

Also, HSBC appeared to be supportive of the new seeping and controversial national security law for Hong Kong which Beijing had imposed in early June. The stance taken by the bank on the new law back then had immediately sparking controversy over calls that the British bank was lending its support to the anti-democratic laws, which critics claim are aimed to reuce the autonomy of Hong Kong under the one country, two systems framework.

HSBC was also accused of being a “corporate kowtow” to Beijing by the US secretary of state, Mike Pompeo, during the same month, as he cited reports of Hong Kong-based executives at Next Media being unable to access their bank accounts.

Despite the Chinese asset manager classifying the share purchase as “a long-term financial investment”, it is not clear if Ping An’s increased investment is a political move.

According to speculations by some bank watchers, the increase in stake at the bank was potentially likely to have been made because of the confidence that HSBC would soon begin to pay investors a dividend again soon.

Ping An had “said that it has confidence in the long-term prospects of the bank. The cancelled and subsequent discontinued dividend is viewed by Ping An as short-term and that dividends will resume as the outlook improves”, said Peter Garnry, the head of equity strategy at Saxo Bank.

(Adapted from TheGurdian.com)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s