Asia report: Markets finish weaker as HSBC hits 25-year low

Markets in Asia finished in the red on Monday, with Hong Kong-listed banks leading the losses after revelations that a number of large lenders had been implicated in moving large amounts of suspicious money for almost 20 years.

Bourses in Japan were closed for a public holiday, as the yen strengthened 0.39% against the dollar to last trade at JPY 104.16.

On the mainland, the Shanghai Composite was down 0.63% at 3,316.94, and the smaller, technology-heavy Shenzhen Composite lost 0.52% to 2,208.30.

The People’s Bank of China kept interest rates on hold during the session, with the one-year loan prime rate remaining at 3.85% and the five-year rate at 4.65%.

South Korea’s Kospi was 0.95% weaker at 2,389.39, while the Hang Seng Index in Hong Kong slid 2.06% to 23,950.69.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics falling 0.17%, while SK Hynix rose 0.96%.

HSBC Holdings slid 5.33% in the special administrative region, trading at its lowest levels in 25 years, while Standard Chartered was 6.18% lower by the end of the session.

Those moves came after the two banks were among several implicated in media reports as having been involved in moving suspicious funds around for almost 20 years.

The reports came from apparently confidential documents banks had submitted to the US government.

“The reality is that there will always be attempts to launder money and evade sanctions; the responsibility of banks is to build effective screening and monitoring programmes to protect the global financial system,” Standard Chartered said in a statement.

It is expected that the US government would push for fines for the banks involved.

AJ Bell investment director Russ Mould said HSBC had already been facing serious headwinds due to the pandemic, namely the risk of a large jump in customer bad debts and the prospect of low interest rates for a long time in many of its operating regions.

“Banks will find it harder to grow earnings when rates are low.

“This earnings struggle also affects their future growth opportunities as companies like HSBC will effectively be missing out on extra profit that could be reinvested back in their business to either make them more competitive, accelerate growth through making additional loans to customers, strengthen balance sheets or pay more dividends to shareholders in the future.

“Adding to HSBC’s woes have been political tensions between Hong Kong and the US, the bank being less efficient at generating profits than before the global financial crisis, and a prolonged period of underperformance with its US operations.”

Oil prices were weaker at the end of the Asian day, with Brent crude last down 1.85% at $42.35, and West Texas Intermediate falling 2.46% at $40.10 per barrel.

In Australia, the S&P/ASX 200 dropped 0.71% to 5,822.60, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.81% weaker at 11,539.10.

The down under dollars were both weaker on the greenback, with the Aussie last off 0.25% at AUD 1.3757, and the Kiwi retreating 0.51% to NZD 1.4875.