New | HSBC stock soars in late entry to Hong Kong market’s rally

HSBC Holdings made a belated entry into the Hong Kong rally on Monday,  with its shares soaring as much as 6 per cent on a report of a possible spin-off of its British retail unit following hot on the heels of a revelation by Europe’s biggest bank that it may move its home base from Britain.

While HSBC helped lift the Hang Seng Index to a 1.33 per cent gain, the Shanghai stock benchmark soared 3 per cent by the close, after a report that the number of centrally administered state-owned enterprises may be consolidated, from 112 to 40. Speculation boosted energy stocks on both sides of the border.

For HSBC, yesterday  saw the biggest one-day rise in its shares since December 2011. The stock closed up 3.6 per cent at HK$76.45, the highest level this year. But it remains 11 per cent below its high of the past year.

Analysts said the surge in HSBC shares reflected, in part, their underperformance as mainland capital pushed a number of blue-chip stocks to records. HSBC shares have risen 3.3 per cent this year, against a 20.5 per cent increase in the Hang Seng Index. The benchmark added 372.61 points to 28,433.59 yesterday.  

“The spin-off news has little to do with HSBC’s solid recovery in its share price,” said Ben Kwong Man-bun, a director of KGI Asia, referring to a British media report. Any decision on moving headquarters may take several years to complete, he said.

At  the bank’s annual meeting on Friday, HSBC chairman Douglas Flint said it would review the future of its headquarters in response to the regulatory reform launched in Britain since the financial crisis. A potential change in its domicile to Hong Kong could free up US$14 billion in value for shareholders, Stanford C. Bernstein estimates.