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
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)