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HSBC slumps as US weighs moves to punish banks in Hong Kong
HSBC Holdings Plc, which draws more than two-thirds of its pretax income from Hong Kong, slumped as advisers to US President Donald Trump were said to be discussing a move to punish banks in the city and destabilise the currency peg to the dollar.
HSBC was named as a potential target, Bloomberg News reported, citing people familiar with the case. Secretary of State Michael Pompeo last month singled out Peter Wong, the bank's Asia Pacific chief executive officer, for signing a petition supporting "Beijing's disastrous decision to destroy Hong Kong's autonomy."
HSBC on Wednesday fell as much as 4 per cent in Hong Kong, the most in more than three weeks, making it the biggest drag on the benchmark Hang Seng Index. The bank's stock fell 3.5 per cent in London early trading, extending this year's loss to 36 per cent.
"Disruption to the currency peg and dollar funding, with HSBC reporting in US-dollars, could erode revenue and accelerate material changes in its dual listing and structure," Bloomberg Intelligence analysts Jonathan Tyce and Francis Chan wrote on Wednesday.
London-based HSBC has been walking a political tightrope as it seeks to expand in China in a bid to boost profits, shifting away from struggling operations in Europe and the US. The bank last month endorsed China's new security law and is now drawing further criticism from politicians in the US and the UK.
HSBC announced last month it would revive a massive cost reduction plan that had been put on halt due to the virus. The plan, which includes cutting 35,000 jobs globally, is part of a move by HSBC to pivot more of its business to Asia. The bank has also planned to shrink US retail, French and non-ring fenced UK exposure. BLOOMBERG