Better a dividend cut than a cash call

THOUSANDS of HSBC investors have banded together to ask the bank to pay a final dividend. If they succeed, other banks and companies may find themselves pressured into doing the same. But pressuring companies into continuing to pay dividends may not lead to optimum outcomes for investors in this environment.

HSBC was one of five large UK banks to announce earlier this month that they were revoking their dividends in order to better serve "businesses and households" affected by the novel coronavirus pandemic.

But investors in Hong Kong want the bank to pay what it had proposed, especially since the stock had already traded ex-dividend before the announcement.