Hang Seng Bank, a subsidiary of HSBC, jumped on Wednesday to its highest level in 12 months after brokers said the Hong Kong lender may consider paying a special dividend of more than HK$10 dollar per share to investors.
Shares of Hang Seng Bank rose 2.8 per cent to a 52-week high of HK$155.7, following its decision on Tuesday of selling up to 4.99 per cent of its 5.87 per cent stake in the Shanghai-listed Industrial Bank for 16.8 billion yuan.
Analysts at Barclays said the share sale of Industrial Bank makes strategic sense for Hang Seng as it boosts the core capital adequacy ratio to 18 per cent from 14 per cent currently, while it removes the overhang on dividend payout and return on equity.
“We continue to see the potential for a special dividend of HK$10 per share,” it said, adding that a one-off gain of HK$7.6 billion will result from the asset disposal.
Citi analysts said the company may issue a special dividend of as much as HK$11 per share, depending on the company’s decision on whether to fully give out the one-off gain.
On the flip side, shares in China Resources Land plunged more than 6 per cent to HK$25.4, a 10-day low, after the state-owned developer on Tuesday raised more than HK$10 billion by selling 400 million shares to a consortium of investors. The company had priced the shares at HK$25.25, which seem to be at the lower end of the range expected by market sources.