HSBC stocks down as US targets Hong Kong currency peg
The bank derives more than 75% of its pre-tax income from Hong Kong
Stocks impacted: HSBC Holdings plc (HSBC)
HSBC shares came under pressure after a report the US could target Hong Kong’s currency peg with the dollar in retaliation for China’s recent moves to erode political freedoms in the former British colony. However, the proposal that has yet to reach Trump, is alderay facing opposition from some parts of the administration as they fear that it would hurt Hong Kong banks as well as the U.S itself. If the authorities decide to remove the peg, HSBC would feel the impact more than its counterparts as the possible measures would limit its ability to purchase dollars. As a reminder, the bank derives more than 75% of its pre-tax income from Hong Kong. Also, there is already a bill, the “Hong Kong Autonomy Act” that would enable the U.S. government to sanction individuals and entities enforcing legislation alongside banks conducting significant transactions with them. Following the reports about possible retaliation measures, HSBC shares dipped over 4%.
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