HSBC Shares Rebound From Historic Lows In Hong Kong As Ping An Increases Stake

HSBC Holdings Plc HSBC shares recovered from the historic low hit last week in Hong Kong on Monday, surging as much as 10% in intraday trading.

What Happened: The surge came following China's largest insurer Ping An Insurance Company of China Ltd PNGAY increasing its stake in the banking giant. 

According to the South China Morning Post, Ping An bought 10.8 million HSBC shares for a total consideration of $39.4 million from the open market when it was on a downward spiral.

The Chinese insurer increased its position in HSBC from 7.95% to 8% with the purchase, according to SCMP. These transactions were carried out through Ping An’s investment management arm, Ping An Asset Management. Financial services company BlackRock Inc BLK holds 7.14% in HSBC, SCMP noted.

Why Does It Matter: The Ping An purchase of its shares came as a relief for HSBC after a rough week.

An expose last week on the FinCEN files — the Suspicious Activity Reports review — flagged many questionable transactions by HSBC. As a result, the bank’s stock crashed to $17.95, a new 52-week low.

Bank of America analyst, Richard Thomas, downgraded HSBC's debt last week, citing the FinCEN files report as well as a possibility that the Chinese regulators would classify the bank as an “unreliable company.”

A Ping An spokesperson told SCMP that the insurance company has always viewed HSBC as a "long-term investment."

The Chinese insurance company has been buying HSBC stock since 2016 and exceeded the 5% regulatory reporting threshold in December 2017.

Price Movement: HSBC stock dropped 1.52% during Friday’s trading session to close at $18.11 in New York.

The bank's shares traded 9.2% higher at HKD 30.80 at press time in Hong Kong.

Photo courtesy: Solomon203 via Wikimedia