By
Mayowa Adebajo
March 27th, 2024
HSBC Hong Kong shares rallied as its largest single stakeholder Ping An bought 10.8 million shares, increasing its stake to 8%.
Shares of HSBC Holdings plc (NYSE: HSBC) rallied on Monday in Hong Kong after its largest shareholder Ping An Insurance increased its stake. Ping An, the Chinese company, raised its HSBC stake from 7.95% to 8% despite the ongoing tension between Washington and Beijing.
Ping An revealed the new stock purchase in an exchange filing on the 25th of September. In addition, the Chinese firm said that its assets management arm bought 10.8 million of HSBC shares. Ping An has been a major stakeholder in HSBC since 2017.
Ping An Increases Stake in HSBC
Following Ping An’s stake increase, HSBC Hong Kong’s shares had its most significant intraday jump of 8.5% on Monday. Shortly after, the investment bank dropped to 7.8% during the midday trading break.
Currently, HSBC is up 9.55% to $19.84 in premarket trading. Apart from the recent addition fueled by the stake increase, the rising tension between Washington and Beijing has affected the British investment bank. With a current market capitalization of $73.32 billion, HSBC has lost $84 billion in market value this year.
Amidst other losses, HSBC’s shares dropped 8.9%, a 25-year low in the past week. The bank fell 52.68% over the past twelve months and 53.67% in 2020. Also, the company lost more than 23% in the last three months with a further decline of 16.27% in the past month. Recently, HSBC plunged nearly 3% over the last five days.
A Redburn analyst Fahed Kunwar noted that HSBC’s stock is the worst-performing among other banks in Europe:
“Something has changed in the way HSBC, the equity, is perceived. It should be outperforming, instead it is underperforming.”
Regardless of HSBC’s recent losses, its largest investor, Ping An Insurance, still shows much confidence in the company. Speaking to South China Morning Post, a Ping An spokesman commented on the purchase:
“All we have said previously is HSBC is a long-term investment.”
HSBC Before Stake Increase
Before now, shareholders found HSBC as a solid bet to invest. Retail investors also relied on the bank’s dividends to boost their retirement income. However, HSBC suspended its dividend in April. According to analysts, brokers, and investors, HSBC announced the suspension at its chief regulator’s request in the UK.
In contrast, Barclays (LON: BARC) and Lloyds Banking Group (LON: LLOY), which also suspended dividends, are outperforming HSBC. Lloyds Banking Group climbed nearly 8% over the past five days.
The founder of Surich Asset Manager in Hong Kong, Simon Yuen commented on the ongoing tension between the U.S. and Chinese governments.
“What is driving the share price? One of the major concerns is the uncertainty ahead, especially in times where the US and China [relationship] is growing quite tense.”
According to a report by South China Morning Post, Yuen further suggested that investment in HSBC should be on hold. Yuen advised investors against putting funds in the bank till after the U.S. presidential election on the 3rd of November.