HSBC and Standard Chartered sink as China plans to impose new security laws on Hong Kong
HSBC Holdings PLC (LON:HSBA) and Standard Chartered PLC (LON:STAN) saw their shares sink on Friday following fresh moves by the Chinese government to rewrite Hong Kongs legal code, sparking fresh fears of protest and erosion of the independence of the financial hub.
Shares in HSBC fell 4.2% to 382p in late morning trading while Standard Chartered slipped 1.9% to 384.1p. Both banks have significant operations in Asia and derive a large portion of their profits from the region.
The banks worsening fortunes followed a sharp fall this morning in the value of Hong Kongs Hang Seng stock market index as investors fretted that increased Chinese interference in the territory could cause yet more violent clashes between authorities and pro-democracy activists as well as potentially jeopardising the citys status as a liberal trade hub.
“Last year, pro-democracy protests were common in Hong Kong, some of which caused major disruption, so traders are now worried the situation will flare up again”, said David Madden at CMC Markets.
Recent events place HSBC in a particularly tricky position, with the bank having previously considered moving its headquarters to Hong Kong from London.
Pressure to relocate increased in April after HSBC suspended dividend payments under pressure from the Bank of England, attracting the ire of Hong Kong retail investors.
New security laws
The catalyst for the share price slide came overnight when Chinas rubber stamp parliament, the National Peoples Congress, said it will draw up plans to impose national security legislation on Hong Kong after multiple failed attempts to pass similar laws in the territorys local legislature.
The law, which will be added to Hong Kongs mini-constitution, the Basic Law, will target subversion, terrorism and foreign influence, however, critics have voiced concerns that the legislation will be used against political dissidents and also breach the One Country, Two Systems framework that has governed the relationship between Hong Kong and mainland China Read More – Source