Shares in HSBC Holdings and other financial stocks fell sharply yesterday on renewed concern about bad debts after Bank of America Corp reported a US$13.4 billion loan-loss provision. HSBC plunged as much as 6.37 per cent in Hong Kong before ending down 5.1 per cent at HK$52.15. Standard Chartered dropped 5.08 per cent to HK$106.50. Ivan Li, an analyst at Kim Eng Securities, said he expected that banking stocks could fall further in the near term. 'Stocks such as HSBC have risen quite a lot after their results announcements but the operating environment has not changed that much,' Mr Li said. Banks will still feel the pressure of rising bad debt in the current adverse economic environment, he said. UBS, which raised its target price for HSBC to 530 pence (HK$60.19) from 450 pence, said the bank's US consumer finance unit remained a drag on earnings, although any further downside seemed moderate as the US stimulus package kicked in. Financial stocks in the United States fell sharply Monday as investors appeared to have doubts about bank earnings reports, questioning whether their better than expected performance masked even more bad debts. Kenny Tang Sing-hing, head of research at Redford Securities, said shares of financial stocks in Hong Kong fell because they mainly followed declines in foreign markets. Mr Tang expected shares of HSBC could consolidate at about the HK$60 level but would have support at HK$50. 'The bank's financial strength is better than its international peers and the bank has no need of any bailout from government so far,' he said. However, smaller banks could still be under pressure. Dah Sing Banking Group, a medium-sized bank in the city, is attempting to raise up to HK$302.4 million from the sale of discounted shares to institutional investors amid a falling market, sources said. The lender has mandated HSBC to help offer 54 million new shares at HK$5.60 each, about the midpoint of the indicated range of HK$5.55 to HK$5.70, through a top-up share placement, according to a sales document obtained by fund managers. The new shares represent a discount of up to 15.15 per cent to the stock's closing price of HK$6.60 yesterday. The proceeds will go towards strengthening its capital base. Separately, Hu Huaibang, the chairman of Bank of Communications, said HSBC would raise its stake in the mainland lender by 0.75 percentage point to 19.9 per cent, according to Xinhua. Mr Tang said the news was positive as it showed the bank was focusing on fast-growing emerging markets. Tom Tobin, the chief executive of HSBC Bank (Vietnam), said the bank planned to open eight new sub-branches this year in Vietnam.