When I lived in Hong Kong in the late 1980s, everyone I knew owned HSBC shares. In those days it was known as the HongKong and Shanghai Banking Corporation and its headquarters was firmly located at 1 Queen’s Road Central in the unique structure conceived by the famous British architect, Sir Norman Foster (which, according to folklore, was designed in such a way that it could be pulled apart and placed into a flat pack to facilitate a move to a new location, if needed, after 1997) and the Chairman, Michael Sandberg, lived in an interesting looking house on the Peak which was clearly visible from Central (the CBD district).
Most Hong Kongers owned HSBC shares partly because of the bank’s generous dividend policy which, for the past 74 years, has delivered quarterly payments on time to the many thousands of HK households who set their watch by the time when the payments hit their bank account (also with HK Bank) and they were seldom disappointed. But, like many other things, times have changed.
In this Motley Fool article “HSBC’s Future Depends on These 3 Factors”, they make the point that “HSBC’s stock price has fallen around 34% year-to-date and the bank recently cancelled its dividend for the first time in 74 years. Since the beginning of 2000, the bank’s total returns have also been negative. While HSBC’s stock has lagged in the past, its future isn’t set in stone”. These last few words kept me interested and so I carried on reading.
After addressing the 3 factors, they conclude by saying “HSBC’s future stock performance will depend heavily on how well its management executes, how well it does in China, and how the bank handles the fintech revolution”, Fair enough, but then they deliver the killer blow saying “buying HSBC shares is an out-of-date idea”.
Has it really got that bad? Is it time to place your HK dollars under the mattress? Many people I knew in those days would turn in their graves at this preposterous idea!