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HSBC Shares Rebound From Historic Lows In Hong Kong As Ping An Increases Stake

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HSBC Shares Rebound From Historic Lows In Hong Kong As Ping An Increases Stake

HSBC Holdings Plc (NYSE: HSBC) shares recovered from the historic low hit last week in Hong Kong on Monday, surging as much as 10% in intraday trading.

What Happened: The surge came following China's largest insurer Ping An Insurance Company of China Ltd (OTC: PNGAY) increasing its stake in the banking giant. 

According to the South China Morning Post, Ping An bought 10.8 million HSBC shares for a total consideration of $39.4 million from the open market when it was on a downward spiral.

The Chinese insurer increased its position in HSBC from 7.95% to 8% with the purchase, according to SCMP. These transactions were carried out through Ping An’s investment management arm, Ping An Asset Management. Financial services company BlackRock Inc (NYSE: BLK) holds 7.14% in HSBC, SCMP noted.

Why Does It Matter: The Ping An purchase of its shares came as a relief for HSBC after a rough week.

An expose last week on the FinCEN files — the Suspicious Activity Reports review — flagged many questionable transactions by HSBC. As a result, the bank’s stock crashed to $17.95, a new 52-week low.

Bank of America analyst, Richard Thomas, downgraded HSBC's debt last week, citing the FinCEN files report as well as a possibility that the Chinese regulators would classify the bank as an “unreliable company.”

A Ping An spokesperson told SCMP that the insurance company has always viewed HSBC as a "long-term investment."

The Chinese insurance company has been buying HSBC stock since 2016 and exceeded the 5% regulatory reporting threshold in December 2017.

Price Movement: HSBC stock dropped 1.52% during Friday’s trading session to close at $18.11 in New York.

The bank's shares traded 9.2% higher at HKD 30.80 at press time in Hong Kong.

Photo courtesy: Solomon203 via Wikimedia

 

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