HSBC rights issue draws HK$40b from 60,000

PUBLISHED : Saturday, 04 April, 2009, 12:00am
UPDATED : Saturday, 04 April, 2009, 12:00am

Shares in HSBC Holdings ended flat yesterday after the closing of its rights issue, but at least 60,000 Hong Kong investors have committed to pay more than HK$40 billion for the discounted shares proposed by the British banking giant.

The stock had fallen 34.9 per cent to HK$31.53 between March 2, when the bank announced the rights issue, and March 9 but had since recovered 56.83 per cent to HK$49.45 yesterday.

A source said more than 90 per cent of the bank's estimated 67,000 investors in Hong Kong had taken up the rights issue. That represents one-third of the bank's global shareholder base of 210,000. Hong Kong shareholders also contributed about one-third of the proceeds of the issue.

A source said more than 80 per cent of HSBC shareholders in Britain had decided to take up their position in the rights issue.

Yesterday was the deadline for Hong Kong investors to file their applications for the proposed rights. Shareholders who take part in the rights issue will receive their allocations on Wednesday.

Pamela Chung Kong-hung, a transaction management director at Computershare Hong Kong Investor Services, declined to comment on the take-up figures but said: 'We have seen a very high take-up rate.'

HSBC plans to raise new cash from shareholders to boost its capital base by offering them 5 new shares for every 12 ordinary shares at HK$28 each. The new shares will be credited to shareholders' accounts on Thursday and can be traded after the market opens on that day.

David Li Kwok-po, the chairman of Bank of East Asia, said he had already taken part in the rights issue and remained bullish on the stock.

Market watchers were not surprised at the overwhelming response from small shareholders, as most of them were long-time supporters of the bank.

'I feel comfortable about [HSBC's] recent performance and decided to buy more right shares,' Miss Lee, a small shareholder, said.

Kenny Lee Yiu-sun, the chairman of the Hong Kong Stockbrokers Associations, expected most local shareholders to have taken part in the rights issue. Still, he was bearish on the stock's outlook, citing the bank's global exposure and the potential risks of the financial turmoil.

He added that the rebound of HSBC shares recently, partly because of the easing of mark-to-market accounting rules in the United States, could be a short-term phenomenon.

HSBC closed at HK$49.45 yesterday, up 0.1 per cent, after opening 2.94 per cent higher at HK$50.85 in the morning session. It fell 5.34 per cent to close at ?4.345 (HK$49.68) in London. In New York, its American depositary receipts were 2.69 per cent lower at US$32.24 at noon.

Ben Kwong Man-bun, the chief operating officer at KGI Asia, expected the shares to stay at current levels in the near term even though some market observers tipped that the stock could plunge when the new shares start trading next week.

'There will not be too much selling pressure at the moment. There is still the benefit from the positive news of the G20 economic summit,' Mr Kwong said.

Kenny Tang Sing-hing, the head of research at Redford Securities, also expected the bank's stock would move sideways from current levels.

'People can sell the shares ahead if they want to, but the share price indicates that it's not the case,' said Mr Tang, adding that it could be because of good market sentiment recently.

Li Siu-kei, the chief executive of Bank of Communications Trustee, said the retirement funds under the trustee had committed to subscribe to the right shares.