HSBC Hong Kong shareholders mull legal action over dividend suspension

Hong Kong is HSBC’s single most important market, and it is one of three note issuing banks there. (AFP)
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Updated 06 April 2020

HSBC Hong Kong shareholders mull legal action over dividend suspension

  • Europe’s biggest bank by assets has a large number of small shareholders in the city
  • Hong Kong is HSBC’s single most important market, and it is one of three note issuing banks there

HONG KONG/LONDON: HSBC shareholders in Hong Kong are calling for an extraordinary meeting with the bank’s management and considering legal action against its decision to scrap dividend payments.
HSBC and other top British banks on Wednesday announced the suspension of dividend payouts after pressure from the regulator to conserve capital as a buffer against expected losses from the coronavirus crisis.
Founded in Hong Kong about 150 years ago as Hongkong and Shanghai Banking Corp, Europe’s biggest bank by assets has a large number of small shareholders in the city who have long benefited from the bank’s stable dividend payments.
Some of the Hong Kong shareholders have created a Facebook page, which had more than 3,000 members as of Sunday, to discuss possible action against the London-headquartered bank’s dividend halt.
“At this stage, we must call an EGM (extraordinary general meeting) to let the management explain to us,” H.T. Chan, a 46-year-old retired driver who is part of the Facebook group, told Reuters. “For legal action, it depends on what they respond in the EGM. Hopefully, we can call this meeting.”
Shareholders of a company with at least 5 percent of the total voting rights may require it to convene an EGM, according to Hong Kong laws.
As of Sunday, the newly formed HSBC Shareholders Alliance in Hong Kong had registered members with combined ownership of about 2 percent of the bank’s stock, Ken Lui, the convenor of the alliance, told reporters on Monday.
“Our goal is to gather 5 percent of shareholding to call for an EGM ... we are very optimistic as we have only set up this alliance four, five days ago.”
In a letter to Hong Kong shareholders after the dividend halt, HSBC Chief Executive Noel Quinn said the bank’s board would review the position once the economic impact of the pandemic was better understood.
“We profoundly regret the impact this will have on you, your families and your businesses. We are acutely aware of how important the dividend is to our shareholders in Hong Kong,” he wrote.
Analysts and investors saw little chance of the shareholder group reversing the dividend decision.
“I see the debate about the banks’ dividends as a very short one: regulator tells them what to do and they comply – end of story,” said one London-based institutional investor.
The bank’s retail investors have a good chance of forcing the EGM to happen, said Ed Firth, analyst at KBW in London.
“Whether HSBC holders getting an EGM will result in any change is far less likely,” he said.
“On the margins they may be able to establish that the Bank of England was responsible for the cut which might be relevant for future legal actions, but it looks reasonably marginal,” he said.
Hong Kong is HSBC’s single most important market, and it is one of three note issuing banks there.
A spokeswoman for HSBC said on Sunday the bank was not able to comment on any legal proceedings not yet started.
“I am following the majority action. This is a significantly essential issue as you have promised substantial and persistent dividend-paying, but you fail to do that,” said Kingsley Chow, a 39-year-old unemployed man relying on dividend income.
“Our first demand, at least, you have to open (an) EGM to explain to us face-to-face, not just an apology letter!,” he wrote on the Facebook page, referring to Quinn’s letter.


Saudi imports from China up 17.8 percent in 2020 to $28.1bn

Updated 8 min 55 sec ago

Saudi imports from China up 17.8 percent in 2020 to $28.1bn

  • Bilateral trade between the two countries remains steady amid the ongoing global health crisis

RIYADH: Saudi imports from China rose 17.8 percent year-on-year in 2020 to $28.1 billion, according to a report from Mubasher, citing figures from China Customs.

Despite this increase, the Kingdom’s overall trade surplus with China was down 63.9 percent last year to $6.2 billion, thereport said.

Trading between the two nations has remained steady.

On Wednesday, Reuters news agency reported that Chinese government data showed the Kingdom was still the world’s biggest oil exporter, as well as beating Russia to keep its ranking as China’s top crude supplier in 2020.

Oil demand in China, the world’s top oil importer, remained strong last year despite the challenges brought on by the coronavirus disease (COVID-19) pandemic. Chinese imports rose 7.3 percent to a record 542.4 million tons, or 10.85 million barrels per day (bpd).

HIGHLIGHTS

  • Year-on-year profits drop, but bounce back from Q2 loss.
  • Store re-openings, cost cuts, more full-price sales helped.
  • Rivals also bounce back from pandemic-induced slump.

Saudi shipments to China in 2020 rose 1.9 percent from a year earlier to 84.92 million tons, or about 1.69 million bpd, data from the General Administration of Chinese Customs showed.

Political commentator Zaid M. Belbagi wrote in an Arab News opinion piece that, with the increased importance of land and sea routes connecting Asia with Europe and Africa, China increasingly saw relations with the Arab world as “central” to its geostrategic ambitions.

“There is, however, a disconnect between the expansion of Chinese involvement in the region across the political and economic realms and the cultural and diplomatic connectivity required to deepen ties that will not only ensure Chinese interests, but also encourage Arab states to partake in the new world China is building in its own image,” he said.

Saudi-China relations have strengthened over the years. During the COVID-19 pandemic, ties were further strengthened with the two countries offering each other assistance and staunch support.

The past three years have marked a rapid increase in Saudi-China links. King Salman visited the country as part of a six-country Asian tour early in 2017, setting the seal on a “comprehensive strategic partnership” between the two countries when he met Chines President Xi Jinping.

A joint high-level committee was established to guide future economic development strategy.

That was followed by a later visit by Crown Prince Mohammed Bin Salman, adding greater depth to the relationship and further aligning the two countries’ main economic development plans — the Belt and Road Initiative by which China seeks to play a leading role in regional development, and the Vision 2030 strategy aimed at diversifying Saudi Arabia away from oil dependency.

China has also become the top export destination of Gulf Cooperation Council (GCC) petrochemicals and chemicals, accounting for about 25 percent of GCC exports.

At $180 billion, the GCC (GCC) trade with China accounts for over 11 percent of the bloc’s overall trade. In 2020, China became the GCC’s top trading partner, replacing the EU for the first time.

 

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