Could HSBC shares, already at historic lows, sink further as US-China relations worsen, investors lose faith?
- Rising US-China tensions, weaker operating environment and slashed dividends are testing the lender’s investor base as it doubles down on Asia
- Bank has lost US$84 billion in market capitalisation since the beginning of the year
For decades, HSBC was a solid bet for investors.
The London-based lender benefited from its ability to bridge the divide between East and West, as mainland China grew into the linchpin of the world’s supply chains, and it boasted a steady income from a large deposit base, as the biggest of the three currency-issuing banks in Hong Kong.
The 155-year-old bank also paid a healthy dividend that retail investors in the city regularly relied upon to supplement their retirement income. Similar to US Treasury bonds, its shares are a common gift for birthdays, graduations and anniversaries.
But, the faith of its Hong Kong investor base has been sorely tested in the past year, as the lender repeatedly found itself caught up in an increasingly fraught relationship between Washington and Beijing, and after it suspended its dividend in April at the request of its chief regulator in the United Kingdom, according to analysts, brokers and investors.
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“What is driving the share price? One of the major concerns is the uncertainty ahead, especially in times where the US and China [relationship] is growing quite tense,” said Simon Yuen, the founder of Hong Kong investment manager Surich Asset Management.