Tue, Sep 29, 2020 page10

• Ping An’s HSBC buy raises shares most since 2009

  VOTE OF CONFIDENCE: Ping An sees the bank’s suspension of dividend payments as a short-term issue, but share prices could still fall, analysts said

  • Bloomberg
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  HSBC Holdings PLC shares yesterday rose the most in Hong Kong trading since 2009, recovering from a 25-year low, as its biggest shareholder raised its stake in a bet the embattled lender would return to paying dividends.

  Ping An Insurance Group Co (平安保險集團), which last week bought 10.8 million shares to boost its stake to 8 percent, remains confident in HSBC’s long-term prospects, a spokesperson said.

  The recent slump in the share and the valuation only increases HSBC’s appeal, the spokesperson said.

  

  The headquarters of ByteDance, the parent company of video sharing app TikTok, in Beijing is shown in a photograph on Sept. 16.

  Photo: AFP

  “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 shares rose as much as 11 percent, the biggest intraday gain since April 2009. They were up 9.9 percent to HK$31 as of 2:54pm in Hong Kong, clawing back last week’s tumble.

  The territory’s benchmark Hang Seng Index rose 0.9 percent.

  The bank last week plunged to 25-year low in part on speculation its massive push into China could be thwarted.

  The Chinese Communist Party’s Global Times newspaper reported that the bank could be put on an “unreliable entity” list that aims to punish firms, organizations or individuals that damage national security.

  HSBC has rankled China over its participation in the US investigation of Huawei Technologies Co (華為).

  At the behest of UK regulators, the bank earlier this year suspended its dividend payments, alienating its loyal Hong Kong retail investor base.

  The lender’s shares have trailed the Hang Seng Index in five out of the past six years once dividends are excluded.

  HSBC has pledged to review the payout once the effects of the COVID-19 pandemic become clearer.

  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,” said Ivan Li (李聲揚), director of investment research at Convoy Global Holdings Ltd (康宏環球控股).

  Shenzhen-based Ping An, which has owned a major stake in HSBC since late 2017, has seen the value of those shares tumble by more than US$8 billion over the past three years, according to data compiled by Bloomberg.

  It last increased its holdings in late 2018, when it bought more than 5 million shares at an average price of HK$65.12, according to filings to the Hong Kong exchange.

  “Ping An boosting stake is also a vote of confidence in HSBC’s long-term fundamentals as it believes the lender should resume dividend payout in the future,” Li said. “However, it’s hard to say whether HSBC’s share price has bottomed out since banks globally are still hurt by low interest rates and narrowing margins.”

  HSBC was among the global banks named in a report by the International Consortium of Investigative Journalists on lenders that “kept profiting from powerful and dangerous players” in the past two decades even after the US imposed penalties on the institutions.

  Facing difficulties in navigating low interest rates and surging loan losses sparked by the pandemic, the bank’s profit halved in the first half.

  HSBC chief executive officer Noel Quinn last month warned that bad loans could swell to US$13 billion this year.

  “The overall environment is still challenging, as interest rates are low and there’s no visibility when HSBC will be able to distribute dividends again, as well as the tensions between China and the US,” said Steven Leung (梁偉源), an executive director of UOB Kay Hian (Hong Kong) Ltd (香港大華繼顯控股).
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