Chinese insurer Ping An raises HSBC stake after lender's historic share dive

HONG KONG • China's Ping An Insurance Group raised its stake in HSBC Holdings after HSBC shares slumped to their lowest in a quarter of a century, giving support to the lender that is facing mounting difficulties on several fronts.

Ping An Asset Management, a unit of the insurer, revealed in an exchange filing that last week, it bought 10.8 million shares of HSBC, bringing its stake to 8 per cent and cementing its place as the largest shareholder.

Ping An purchased the shares at an average of HK$28.2859 apiece. HSBC ended last Friday at HK$28.20. Last week, HSBC's shares plunged to a 25-year low, in part on speculation that its push into China could be thwarted.

The ruling Communist Party's Global Times newspaper reported that the bank could be put on an "unreliable entity" list that aims to punish firms, organisations or individuals that damage national security.

Ping An said last week that its holding is a "long-term financial investment". The Shenzhen-based company, which has owned a major stake in HSBC since late 2017, has seen the value of those shares tumble by at least US$8.6 billion (S$11.8 billion) over the past three years, according to data compiled by Bloomberg.

Hong Kong-based insurance analyst Steven Lam from Bloomberg Intelligence said: "Ping An is a long-term investor, so the critical point is whether there are structural issues at the bank that go against the insurer's investment philosophy."

HSBC was also among the global banks named in a report by the International Consortium of Investigative Journalists on lenders that "kept profiting from powerful and dangerous players" in the past two decades, even after the United States imposed penalties on the institutions.

Facing difficulties in navigating low interest rates and surging loan losses sparked by the global pandemic, the bank's profit halved in the first half of this year.

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A version of this article appeared in the print edition of The Straits Times on September 29, 2020, with the headline 'Chinese insurer Ping An raises HSBC stake after lender's historic share dive'. Print Edition | Subscribe