HSBC sinks to lowest level since April 2009 on concerns about Beijing punishment, investigative report

HSBC Holdings slid to its lowest level in more than a decade in Hong Kong trading on concerns the UK lender may face sanctions by China and was accused of helping move funds for individuals and companies that committed financial crimes.

The London-based lender tumbled 5.3% to HK$29.30 at the close of trading, a level not seen since April 2009. About 120 million shares changed hands, more than four times the 30-day average daily trading volume, according to Bloomberg data.

Fuelling the sell-off was a weekend report by the Global Times, a tabloid owned by the Chinese Communist Party, that HSBC may be sanctioned by Beijing for assisting the US in the investigations into Huawei Technologies.

The bank will probably be put on the list of “unreliable entities”, a punishment meted out to foreign companies seen by the Chinese government as compromising national security, according to the news report. Possible punitive measures under the list include restrictions on trade, investments and visa issuances.

Separately, HSBC was named among several global banks that transferred more than $2trn for individuals and organisations tied to potential money laundering and other financial crimes, according to a report published by the International Consortium of Investigative Journalists. Other lenders named in the report include JPMorgan Chase and Standard Chartered.

Both HSBC and Standard Chartered have lost 52% this year, underperforming the benchmark Hang Seng Index that is down 15% in the period. Standard Chartered slumped 6.2% to HK$34.90 on Monday.

HSBC is the worst-performing constituent on the Hang Seng Index in 2020, as the biggest of the city’s three currency-issuing banks suffers from deteriorating business operations.

The bank warned in August that profits will probably drop significantly in the second half as it could set aside $13bn in provision for bad loans because of the global impact of the Coronavirus pandemic.

The political turmoil in Hong Kong has also put the bank in a dilemma. It was criticised in the UK and the US for its support of the controversial national security law imposed by Beijing on Hong Kong in late June, a legislation aimed at squashing dissent in the former British colony.

HSBC also infuriated some of its investors earlier this year by skipping dividend payout, citing the need to preserve cash to face the COVID-19 crisis.