04 June 2020
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Two international UK banks with far-reaching Asian interests last night publicly backed China's proposed national security law for Hong Kong.
This morning shares in both banks rose (HSBC by 2.8% and Standard Chartered by 2.6%) on Hong Kong's Hang Seng Index.
Both HSBC and Standard Chartered have a particularly strong presence in Hong Kong. HSBC, which was founded in the territory in 1865 and makes the vast majority of its profits there, has hitherto strived to remain neutral in the conflict between the Chinese authorities and Hong Kong's pro-democracy campaigners.
Investors should welcome these statements. It has shored up the confidence."
However, last night's public statements, echoing those of Swire and Jardine Matheson a day before, will allay fears that their Hong Kong-reliant businesses will be caught in the middle of the political tensions.
Hao Hong, head of research at Hong Kong-based BOCOM International, told Reuters: "Investors should welcome these statements. It has shored up the confidence."
Hao added, "Hong Kong is a key market for them and it's a key trade hub for the rest of the region."
However, there will be concerns of a Hong-Kong backlash if the global lenders, which both have a large presence in the territory, are seen to not be supportive of Hong Kong's concerns.
In a post on Chinese social media giant WeChat, HSBC said: "We reiterate that we respect and support laws and regulations that will enable Hong Kong to recover and rebuild the economy and, at the same time, maintain the principle of one country, two systems."
The FT published Standard Chartered's statement, which read: "We believe the national security law can help maintain the long-term economic and social stability of Hong Kong."
Leung Chun-Ling, a former chief executive of the territory, warned last week that "HSBC has been enjoying unique privileges in Hong Kong which should not be taken for granted."
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