Short-sellers swooped on HSBC yesterday, sending its shares into their steepest decline since March 2009 as the market reacted to disappointing third quarter earnings and uncertain outlooks for Europe and the global economy.
HSBC accounted for almost 10 per cent, or HK$672.8 million, of the short-sell turnover value in Hong Kong yesterday, making it the most shorted stock in terms of turnover value, according to the city's stock exchange.
The bank's share price slumped 9.13 per cent, or HK$6.20, to HK$ 61.70, while the Hang Seng index dropped 5.25 per cent.
HSBC's third-quarter underlying profit, which excludes any mark-to-market gains or losses related to the bank's own debt as well as any one-off gains or losses, reached US$2.96 billion, a drop of 36 per cent compared to the same time last year.
While markets were already expecting a slowdown in the bank's global banking market business, some analysts said they did not foresee an increase in bad loans in the bank's US operations.
Louis Wong Wai-kit, director of Phillip Capital Management, said: 'I found the write-down in the US mortgage business to be quite a nasty surprise.'
The bank's impairment charges for the quarter rose by 19 per cent year-on-year to US$3.89 billion.