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    HSBA   GB0005405286

HSBC HOLDINGS PLC

(HSBA)
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Delayed Quote. Delayed London Stock Exchange - 10/25 11:39:03 am
441.7 GBX   +1.59%
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Trump aides weighed proposals to undermine Hong Kong?s dollar peg - Bloomberg

07/08/2020 | 09:04am EDT
U.S. 100 dollar banknotes and a Hong Kong 10 dollar banknote are seen in this picture illustration in Beijing, China

U.S. President Donald Trump's top advisers weighed proposals to undermine the Hong Kong currency's peg to the U.S. dollar, Bloomberg reported, citing people familiar with the matter, though the idea did not appear to have gained traction.

The proposal to strike against the Hong Kong dollar peg, possibly by limiting the ability of Hong Kong banks to buy U.S. dollars, was raised as part of broader discussions among advisers to Secretary of State Mike Pompeo, Bloomberg's report on Tuesday said.

Undermining the peg was seen by some advisers as one way to hit back at China for its moves to whittle away at Hong Kong's political freedoms, the report said.

Other administration members pushed back against the proposal, worrying that such a move would only hurt Hong Kong banks and the United States, not China, sources told Bloomberg. The idea also was not elevated to White House senior levels, the report said.

The report will increase speculation over the stability of the 37-year-old exchange rate peg.

Discussions about the peg's fate had already been swirling after Beijing imposed a national security law on Hong Kong, leading Washington to begin withdrawing some privileges it accords to the city.

A Hong Kong Monetary Authority (HKMA) spokesperson told Reuters that the HKMA had commented on the matter on a number of occasions and had nothing further to add.

Hong Kong Finance Secretary Paul Chan said last month there were no plans to change the peg to the U.S. dollar.

Market watchers are pondering what measures could be implemented to undermine the peg and what the fallout would be.

Analysts at broker Hamilton Court FX predicted this could be done by reducing or rescinding swap lines, curbing Hong Kong authorities' ability to buy and sell dollars in order to keep the currency within its defined trading range.

Commerzbank analyst Hao Zhou called it a "low-possibility" event but with risk of huge market impact.

"The idea of sanctions, which limits certain entities to get access to the U.S. dollar, consequently will threaten the HKD peg if markets speculate that the HKMA needs to scrap the current regime at some point," Zhou told clients.

The Hong Kong dollar did not budge on the news, trading at 7.75 against the greenback, near the upper end of the peg's range <HKD=D3>. Hong Kong dollar forward points up to three-month maturities were trading marginally higher.

A top priority for the U.S. administration has been to find ways to punish banks based in Hong Kong, particularly HSBC Holdings Plc, according to the Bloomberg report.

London-listed shares in HSBC tumbled as much as 4.2% on Wednesday while Standard Chartered slipped 2.4%. Both lenders have come into U.S. crosshairs after backing China's national security law last month.

The U.S. Treasury, State Department and the White House did not immediately respond to requests for comment.

HSBC and Standard Chartered declined to comment on the report.

(Reporting by Maria Ponnezhath in Bengaluru; Additional reporting by Karin Strohecker and Lawrence White in London and Twinnie Siu in Hong Kong, Editing by Sam Holmes, Andrea Ricci and Jonathan Oatis)


ę Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
CANADIAN DOLLAR / HONGKONG-DOLLAR (CAD/HKD) -0.09% 6.28183 Delayed Quote.3.16%
COMMERZBANK AG 1.87% 6.474 Delayed Quote.22.94%
EURO / HONGKONG-DOLLAR (EUR/HKD) -0.04% 9.02233 Delayed Quote.-4.38%
HSBC HOLDINGS PLC 1.90% 441.7 Delayed Quote.14.77%
STANDARD CHARTERED PLC 0.04% 489.1 Delayed Quote.4.98%
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Analyst Recommendations on HSBC HOLDINGS PLC
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Financials (USD)
Sales 2021 50 487 M - -
Net income 2021 10 536 M - -
Net Debt 2021 - - -
P/E ratio 2021 11,5x
Yield 2021 3,95%
Capitalization 123 B 124 B -
Capi. / Sales 2021 2,44x
Capi. / Sales 2022 2,38x
Nbr of Employees 222 550
Free-Float 98,2%
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Mean consensus OUTPERFORM
Number of Analysts 24
Last Close Price 6,10 $
Average target price 6,72 $
Spread / Average Target 10,1%
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Managers and Directors
Noel Paul Quinn Group Chief Executive Officer & Executive Director
Ewen James Stevenson Chief Financial Officer & Executive Director
Mark Edward Tucker Non-Executive Group Chairman
Steven C. van Wyk Chief Information Officer
John M. Hinshaw Group Chief Operating Officer
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