The HSBC Group is one of the few listed groups to have fallen below the low point reached at the height of the health crisis, partly because of a growing threat to its expansion plans in China and increasing scrutiny of money laundering controls.
During Monday's session, HSBC's share price lost many points, falling below HK$29.60 on the Hong Kong stock exchange. This represents a loss of 51% since the start of the year and the lowest level reached since 1995. On the London market, the stock lost 3.3% while the Footsie was down only 1.7%.
The reason for this dramatic decline is the fact that this bank is considered potentially acceptable on China's list of unreliable entities, which is intended to penalize companies, organizations or individuals that undermine national security. As a result, the group is likely to encounter great difficulties in gaining a foothold in China.
At least that's what an article in the Global Times reveals. The bank has, for the time being, refused to make any comment on the matter. In a statement made Monday in response to the ICIJ report, the bank had simply stated that from 2012, it has committed tothe bank has embarked on a multi-year journey to review its ability to combat financial crime in over 60 jurisdictions and that the bank is a much safer institution than it was in 2012.The bank also stated that it takes its responsibilities to fight financial crime very seriously and has invested substantially in compliance programs.
The group is likely to face even more obstacles after a build-up of problems over the past year and in the turbulent political and economic environment in the Hong Kong market. It also faces problems of low interest rates and rising loan losses due to the global pandemic.
The increase in revenues from its market activities also failed to compensate for the larger shortfalls, unlike some US and European banks. Thus, HSBC's stock market share has recorded more losses than those of its competitors during this year 2020 such as Citigroup or JP Morgan Chase which have fallen by 44 and 29% respectively since January.
Finally, it should be noted that the banking group has already provoked the wrath of Hong Kong at the beginning of the year by alienating some of its most loyal investors following the suppression of its dividend in the context of the pandemic. As a result, HSBC is currently the worst-performing bank in the Hang Seng Benchmark Index since the beginning of 2020.