Shares of HSBC Holdings PLC, which draws more than two-thirds of its pretax income from Hong Kong, yesterday slumped as advisers to US President Donald Trump were said to be discussing a move to punish banks in the territory and destabilize the local currency peg to the US dollar.
HSBC was named as a potential target, Bloomberg News reported, citing people familiar with the matter.
US Secretary of State Mike Pompeo last month singled out the bank’s Asia-Pacific chief executive officer Peter Wong (王冬勝) for signing a petition supporting “Beijing’s disastrous decision to destroy Hong Kong’s autonomy.”
Photo: AP
HSBC shares fell more than 4 percent in Hong Kong, the most in more than three weeks, making it the biggest drag on the benchmark Hang Seng Index.
The bank’s shares fell 3.5 percent in London early trading, extending this year’s loss to 36 percent.
A Hong Kong-based spokeswoman declined to comment on the US report.
“Disruption to the currency peg and dollar funding, with HSBC reporting in US dollars, could erode revenue and accelerate material changes in its dual listing and structure,” Bloomberg Intelligence analysts Jonathan Tyce and Francis Chan (陳永富) wrote yesterday.
London-based HSBC last month announced that it would revive a massive cost-reduction plan that had been put on hold due to the COVID-19 pandemic.
The plan, which includes cutting 35,000 jobs globally, is part of a move by HSBC to pivot more of its business to Asia. The bank has also planned to shrink US retail, French and non-ring-fenced UK exposure.
In a statement on WeChat (微信) last month, the bank pledged to continue to invest and support the Chinese economy after speculation in local media that its massive restructuring plan would mean an exit from China.
Some top advisers to Trump want the US to undermine the Hong Kong dollar’s peg to the US dollar to punish China for moves to chip away at Hong Kong’s political freedoms, people familiar with the matter said.
However, the proposal has not been elevated to the senior levels of the White House, and faces strong opposition from others in the administration who worry that such a move would only hurt Hong Kong banks and the US, not China, the people said.
The US clearing license is vital to HSBC’s global operations and the bank is one of the largest international lenders operating in the US.
HSBC has hired James Forese, a former senior executive at Citigroup Inc, to its board as it looks to revamp its global business, including its underperforming US unit.
HSBC is also the largest note-issuing bank in Hong Kong, putting it at more risk than Standard Chartered PLC and BOC Hong Kong Holdings Ltd (中銀香港) should the US limit their ability to buy US dollars.
HSBC shares were down 4.3 percent at the end of trading in Hong Kong yesterday. Standard Chartered fell 3.5 percent and BOC Hong Kong lost 1.4 percent.
Additional reporting by staff writer
MARKET LEADERSHIP: Investors are flocking to Nvidia, drawn by the company’s long-term fundamntals, dominant position in the AI sector, and pricing and margin power Two years after Nvidia Corp made history by becoming the first chipmaker to achieve a US$1 trillion market capitalization, an even more remarkable milestone is within its grasp: becoming the first company to reach US$4 trillion. After the emergence of China’s DeepSeek (深度求索) sent the stock plunging earlier this year and stoked concerns that outlays on artificial intelligence (AI) infrastructure were set to slow, Nvidia shares have rallied back to a record. The company’s biggest customers remain full steam ahead on spending, much of which is flowing to its computing systems. Microsoft Corp, Meta Platforms Inc, Amazon.com Inc and Alphabet Inc are
Luxury fashion powerhouse Prada SpA has acknowledged the ancient Indian roots of its new sandal design after the debut of the open-toe footwear sparked a furor among Indian artisans and politicians thousands of miles from the catwalk in Italy. Images from Prada’s fashion show in Milan last weekend showed models wearing leather sandals with a braided design that resembled handmade Kolhapuri slippers with designs dating back to the 12th century. A wave of criticism in the media and from lawmakers followed over the Italian brand’s lack of public acknowledgement of the Indian sandal design, which is named after a city in the
The US overtaking China as Taiwan’s top export destination could boost industrial development and wage growth, given the US is a high-income economy, an economist said yesterday. However, Taiwan still needs to diversify its export markets due to the unpredictability of US President Donald Trump’s administration, said Chiou Jiunn-rong (邱俊榮), an economics professor at National Central University. Taiwan’s exports soared to a record US$51.74 billion last month, driven by strong demand for artificial intelligence (AI) products and continued orders, with information and communication technology (ICT) and audio/video products leading all sectors. The US reclaimed its position as Taiwan’s top export market, accounting for
INVESTOR RESILIENCE? An analyst said that despite near-term pressures, foreign investors tend to view NT dollar strength as a positive signal for valuation multiples Morgan Stanley has flagged a potential 10 percent revenue decline for Taiwan’s tech hardware sector this year, as a sharp appreciation of the New Taiwan dollar begins to dent the earnings power of major exporters. In what appears to be the first such warning from a major foreign brokerage, the US investment bank said the currency’s strength — fueled by foreign capital inflows and expectations of US interest rate cuts — is compressing profit margins for manufacturers with heavy exposure to US dollar-denominated revenues. The local currency has surged about 10 percent against the greenback over the past quarter and yesterday breached
RSS