HSBC rebounds strongly on backing by investor Ping An

HSBC recovered from a 25-year low and rose the most in Hong Kong trading since 2009 as its biggest shareholder raised its stake in a bet the embattled lender will return to paying dividends.

Shares of the British bank yesterday surged as much as 11 percent - the biggest intraday gain since April 2009 - before paring the growth to 9.22 percent. The stock closed at HK$30.80.

In London, HSBC rose as much as 11.5 percent, also the most since April 2009. The stock was up 8.56 percent at 307.60 pounds (HK$3,067.75) as of 9.30pm yesterday.

Shenzhen-based Ping An Insurance last week acquired 10.8 million shares in the bank at an average of HK$28.29 apiece - or over HK$305 million in total - surpassing BlackRock to become the single largest shareholder, data from the Hong Kong Exchanges and Clearing showed.

Ping An now holds an 8 percent stake, rising from 7.95 percent.

It remains confident in HSBC's long-term prospects, a spokesperson said, adding that the recent slump in the share and the valuation only increase HSBC's appeal.

"Ping An believes HSBC's suspension of dividend payments is a short-term issue and has been actively communicating with the lender about the possibility of restoring dividends in the future," the spokesperson said.

HSBC's stock price has fallen more than 50 percent so far this year.

The bank last week plunged to a 25-year low in part on speculation that it could be placed on an "unreliable entity" list by the central government, as well as on reports saying it is among several international banks facing allegations they have moved enormous amounts of illicit funds over a period of nearly two decades. HSBC has also rankled China over its participation in the US investigation of Huawei.

At the behest of British regulators, the bank suspended its dividend payments earlier this year, alienating its Hong Kong retail investor base. HSBC has pledged to review the payout once the impact of the pandemic becomes clearer.

Ivan Li Shengyang, director of investment research at Convoy Global, said the surge is an indication that "investors are less worried about its inclusion on China's unreliable entity list as they believe China wouldn't risk doing so before the US elections."

Ping An, which has owned a major stake in HSBC since late 2017, yesterday saw a gain of about HK$27 million on the purchase. But overall it has taken a loss of more than US$8 billion (HK$62.4 billion) over the past three years.

HSBC chief executive Noel Quinn has warned bad loans could swell to US$13 billion this year.

stella.zhai@singtaonewscorp.com