The HSBC demoted its ranking for Hong Kong’s equities from “neutral” to “underweight” in a report they released yesterday, reports Reuters. In its statement the bank said that the “negative news flow” stemming from Occupy Central might hurt relations with China, thus hurting Hong Kong’s economy. The bank earned over half of its pre-tax profits in Hong Kong and China last year, reports the Wall Street Journal.
An organizer of Occupy Central told the SCMP that he disagrees the protest would have long-term effects on Hong Kong’s economy: “What we are pursuing is the long-term transparency and accountability in the government, which is good for the economy,” he said. “Investors should not worry as this will be a very peaceful protest.”
But wait! Just kidding! HSBC takes it back! After being hurled abuse on Twitter and Weibo, HSBC updated their report and cited “the risk of weak residential real estate prices, the slowdown in mainland tourist arrivals, the market’s link to US interest rates (the Federal Reserve could raise rates next year) and weak earnings momentum” as the reason for the downgrade instead, reports the SCMP.
Well, we downgrade our information reliability outlook for HSBC from “okay” to “not so good”.
HSBC has a record of yielding to political pressures from the mainland. A commercial director at Next Media (which owns Apple Daily) said both HSBC and Standard Chartered stopped advertising with them in late 2013, costing the newspaper—which is known to be critical towards Beijing—roughly 24 million HKD in lost revenue, according to the Wall Street Journal. HSBC said the decision was based purely on commercial grounds.
Photo: WiNG via Wikimedia Commons
