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Hong Kong watchdog probes HSBC 14-year
lowest stock plunge
HONG KONG, (AFP) - Hong Kong’s securities watchdog
said on Tuesday it was investigating a last-minute stock
exchange sell order that pushed shares in banking giant
HSBC to their lowest level in almost 14 years.
One single transaction in the final moments of Monday
of the so-called closing auction that winds up every
trading day in the Chinese territory almost doubled
the day’s losses for shares of HSBC, which ended
down 24.1 per cent.
The drop saw more than 127 billion Hong Kong Dollars
(16 billion US) wiped off the bank’s market capitalisation.
One of Hong Kong’s leading stock commentators broke
down in tears, live on TV as the share price collapsed.
The Securities and Futures Commission (SFC) said it
was looking into the transaction, which reportedly saw
4.7 million shares dumped shortly before the close.
It is believed the shares were sold off by short-sellers
hoping to buy them back at a lower price once the bank
completes its planned rights issue of new shares, which
HSBC is undertaking to raise capital.
“The SFC is aware of what has happened in the closing
auction session in relation to the movement of HSBC’s
share price and we are making inquiries,” a spokesman
for the regulator told AFP.
HSBC closed at 33 Hong Kong Dollars on Monday, its lowest
level since May 1995. Its shares had clawed back 14.6
percent to 37.80 by the close of the Tuesday morning
session.
Hong Kong Financial Secretary John Tsang said he had
met the SFC on Monday evening.
“Lots of Hong Kong people hold HSBC shares and
they are very concerned about the ups and downs of its
price. We are also very concerned and will closely monitor
the development,” Tsang said.
Dow Jones Newswires quoted sources saying that the bank
had no plans to halt its rights issue.
HSBC’s Asia-Pacific Ohief Executive Officer Sandy
Flockhart was to hold a press briefing later Tuesday
and was expected to talk about the rights issue.
Last week, the bank announced a worse-than-expected
70 percent drop in annual net profit and said the rights
issue was needed for future investments -- not to shore
up its balance sheet.
It said the poor results were mainly due to the dire
performance of its US unit, where it has written off
a huge chunk of its debt.
The bank has received pledges of support from major
institutional investors and tycoons in Hong Kong.
Goldman Sachs Group, JPMorgan, Credit Suisse and Royal
Bank of Scotland Group are among the underwriters of
the deal, according to Dow Jones Newswires.
Ratings agency Moody’s on Monday downgraded the
outlook on HSBC’s debt to “negative”
from “stable.”
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