In April 2020 – at the height of the pandemic – it sank 9.5pc, while it fell 19pc in March 2009 during the banking crisis. HSBC also dropped by 13.5pc after 9/11.
HSBC is Europe’s largest lender by size and makes most of its money in Asia, leading to a careful balancing act between the demands of East and West.
BoCom is part of China’s five largest domestic banks, making it strategically important for the Chinese state.
HSBC invested $1.75bn in BoCom in 2004 and now owns a 19pc investment.
“It’s really difficult to break into the Chinese banking market,” said a bank analyst. “The total market share of all foreign banks is no more than a few percent. It’s almost completely dominated by domestic banks.
“If they ever wanted to tap into that market they could try and do it organically but it would be really difficult. It keeps their optionality.”
Western banks quit China in the wake of the financial crisis, with UBS, Bank of America, NatWest, Goldman Sachs, and Citigroup all leaving.
After the mass exodus, one Chinese regulator warned Western banks of the difficulty of re-entering China.
“If they want to return one day, they may have to pay a higher price, a market price, for those stakes,” he said.
Unlike rivals, HSBC has stayed put, giving it a vital foothold in the Chinese market.
HSBC’s ownership of BoCom was a “statement of intent,” the analyst said.
“They have talked a lot about pivoting to Asia and it taps into that. There’s a political angle too because if you were to sell that stake it is almost saying to counterparties in China that you don’t feel good about the Chinese banking market.
“I can’t imagine selling this stake would win them brownie points from the Chinese or Hong Kong Government.”
Mr Quinn on Wednesday said he had no plans to offload the investment, echoing the HSBC party line since the bank bought the stake.
“The status on that stake does not change because of the valuation adjustment we’ve just processed,” he said.
“20 years ago it was very hard for foreign institutions to own a large stake in a financial services organisation in China so we took a stake in BoCom and it gave us access to the profit pool of mainland China’s banking market.
“That stake has served us extremely well. It’s been a very important strategic relationship, and it remains an important strategic relationship.”
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
