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Ping An gets bargain as HSBC shares sink amid crisis

作者:admin 2020-09-28

Ping An gets bargain as HSBC shares sink amid crisis

File photo: HSBC Photo: VCG

Chinese conglomerate Ping An Insurance Group Co went bargain-hunting recently and raised its stake in HSBC, cementing its position as the British bank is engulfed in an unprecedented crisis that has seen its shares slump to a 25-year low, analysts said. 

Ping An Insurance Group bought 10.8 million shares at an average price of HK$28.29 ($3.65) per share on Wednesday, via Ping An Asset Management Co - an investment management arm of the firm - raising its stake in HSBC to 8 percent from 7.95 percent, Reuters reported during the weekend, citing a filing to the
Hong Kong stock exchange on Friday. 

The British bank is facing an unprecedented crisis in the Chinese market for its role in the arrest of Huawei senior executive Meng Wanzhou and its stance on Hong Kong-related issues. The bank's shares plunged to their lowest level since 1995 in Hong Kong in the past few days, as its reported involvement in a dirty money scandal utilizing the bank's accounts in Hong Kong dealt a fresh blow to its sagging reputation.

Li Daxiao, chief economist at Shenzhen-based Yingda Securities, said Ping An has a bargain-hunting mentality. 

"The stock price of HSBC has dived hugely, taking it close to the price during the financial crisis in 2008," Li told the Global Times on Sunday. 

In addition to HSBC, some other banks have performed poorly on the Hong Kong stock market since the coronavirus pandemic, according to Li. "This is a good time for Ping An to raise its stake in HSBC."

After a series of troubles for the London-based bank, investment by a large Chinese enterprise will be beneficial and help HSBC to tighten its connections with the Chinese mainland market, Li said.

Recent leaked files showed that HSBC allowed fraudsters to transfer millions of dollars around the world in 2013 and 2014, and such information came out when the British bank was facing tremendous pressure on multiple fronts including allegations about its role in entrapping Huawei, which could land the lender on China's highly anticipated unreliable entity list, according to some observers. 

 "It is unsure whether Ping An will have a say in HSBC's future. But if it does, and it wins the majority of seats on HSBC's board of directors one day, I hope the Chinese company could transform the way the British bank performs," Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, told the Global Times.

For instance, it could get rid of senior executives who trapped Huawei and those remaining who are unfriendly toward the Chinese mainland, he noted. 

The latest evidence Huawei provided to a Canadian court shows how HSBC deliberately set a trap, pieced together materials and fabricated evidence, to frame Huawei, which may also sink the lender's reputation and prospects in the industry, according to analysts.

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Posted in: ECONOMY

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