HSBC shares tumble as US mulls Hong Kong crackdown
HSBC shares have tumbled four per cent after advisers to the US government said they could undermine the Hong Kong dollar’s peg to the US dollar and crack down on banks in the city.
The UK and Hong Kong-focused bank has been caught up in a geopolitical struggle over the semi-autonomous city which has seen China impose a harsh security law.
Top American and British politicians sharply criticised HSBC and Standard Chartered for backing China over the law last month.
The US and UK oppose the Chinese legislation, which outlaws vague acts such as sedition, subversion and treason. It has already led to arrests in the city, which is a global financial hub.
Today, HSBC and Standard Chartered shares came under pressure following reports the US could crack down on Hong Kong. HSBC was down four per cent at 379.4p while Stanchart fell 2.2 per cent to 432.6p on the UK market.
Advisers to US President Donald Trump are considering undermining the Hong Kong dollar’s peg to the US dollar, according to Bloomberg. One way they could do this is by limiting the ability of Hong Kong’s banks to purchase dollars.
Such a move would damage HSBC’s earnings and destabilise the bank. It earns more than two-thirds of its before-tax income from Hong Kong.
The Trump administration is also considering measures targeted at HSBC, Bloomberg reported. US secretary of state Mike Pompeo last month hit out at the bank’s Asia-Pacific chief Peter Wong for supporting China’s security law.
Fiona Cincotta, market analyst at City Index, said: “HSBC is caught in a political tug of war between the US and China.
“Asia is the biggest regional contributor to HSBC income highlighting the importance of the region to the business. However, sanctions from the US would be extremely damaging.
“The share price in London is still down 40 per cent year to date, reflecting the troubles at the bank, compared to Barclays, for example which trades 26 per cent lower year to date.”