HSBC is preparing to list on the Shanghai stock market in a bid to draw in local investors and further raise its profile, and this could happen within months, City of London experts say.
“You can’t overestimate the importance of China. If the Chinese were to move towards more open capital markets, perhaps allowing foreign institutions to invest in Chinese government debt, HSBC would be better positioned than any other western bank because it already has such a big presence in Hong Kong. The rewards would be enormous,” said Simon Maughan, an analyst at MF Global.
Other analysts are more circumspect.
“Asia is not without its risks: There are already signs that asset prices are overheating, so HSBC have to be careful. On the other hand, they are punching below their weight in personal financial services, so they need to do something,” one analyst said.
Green said that Geoghegan’s move to Hong Kong was rich in symbolism and underlined the fact that Asia and China were “at the heart of HSBC’s business.”
The maneuver has the added benefit of addressing criticism from Knight Vinke, the activist investment group, which argues that the chairman should be less involved in day-to-day strategy, and that the bank should have been focusing more on Asia. By putting Geoghegan in Hong Kong with overarching executive powers, HSBC has tacitly admitted that Knight Vinke might have been right all along.
But the bigger point HSBC has demonstrated is that if you do not have your top executive in Hong Kong, your commitment to China may be viewed as half-hearted.
There is no doubt that other banks will sit up and take notice, as will multinational corporations that are targeting China for expansion.
“You have to be there on the ground if you want to be taken seriously,” Maughan said.
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