HSBC Rights Issues at 51% Discount

123jump.com Staff
02 Mar, 2009
New York City

Stocks in Hong Kong fell sharply after HSBC reported a larger than expected loss and proposed to raise 12.5 billion pounds at 51% discount to the latest closing price.

[R]6:00AM New York, 6:00PM Hong Kong – Stocks in Hong Kong fell sharply after HSBC reported a larger than expected loss and proposed to raise 12.5 billion pounds at 51% discount to the latest closing price.[/R]

Hong Kong stocks dipped after HSBC reported a sharp fall in on rising loan impairment and credit risk provisions.

Hong Kong-listed HSBC unit Hang Seng Bank fell more than 3%.

In Hong Kong trading Hang Seng Index fell 3.9% or 494.11 to 12,317.46, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, slipped 4.6% or 320.61 to 6,582.23. In Shanghai trading CSI 300 index rose 1.1% or 24.18 to 2,164.67.

Daily turnover on main-board increased to HK$36.36 billion from HK$35.28 billion on Friday last week.

HSBC Pretax Profit Declines 62% to $9.3 billion

HSBC reported today that its pre-tax profit in the year ending December 31 fell 62% to $9.3 billion from a year ago. However net interest income in the period rose 13% to $42.6 billion.

Loan impairment charges and other credit risk provisions rose from $7.7 billion from 2007 to $24.9 billion.

In North America a loss of $15.5 billion was reported including goodwill impairment charge of $10.6 billion in personal financial services segment.

The lender declared an interim dividend of 10 cents in the fourth quarter, resulting in an annual dividend of 64 cents per ordinary share.

Separately, the bank also proposed to raise 12.5 billion pounds through a rights issue at HK$28 per share, 50.8% discount to Friday’s closing price of HK$56.95.

Hong Kong Approves 28 Building Plans in January

Hong Kong’s Buildings Department reported today that it has approved 28 building plans in January, with 11 for both Hong Kong Island and the New Territories and six for Kowloon.

New buildings approved in the period were worth HK$5.2 billion.

The report notes that 10 of the approved projects were for apartment and commercial developments and four were for commercial development, two were for factory and industrial development and 12 were for community services developments.
Hong Kong also approved work to start on nine buildings that will avail 139,709 square metres for domestic use and 35,808 square metres of gross floor area for non-domestic use.

In addition, 12 occupation permits were issued- five for Kowloon and seven in the New Territories- that provide 191,589 square metres for 1,116 units for domestic use and 129,972 square metres for non-domestic use.

China Yuan Weakens Against Dollar

Chinese Yuan weakened to 6.8389 against the dollar today from 6.8379 on the previous trading day.

Gainers & Losers

Hong Kong market averages dropped after HSBC announced today that its pre-tax tumbled 18% for the year ending December 31.

Hang Seng Bank dipped 3.2% to HK$84.25 as its second half profit declined 46%

China Construction Bank fell 4.8% after reporting last week that it issued Rmb40 billion subordinated bonds to boost its capital.

Hong Kong Exchanges & Clearing fell 8.1% to HK$57.50 after Morgan Stanley cut its target price to HK$37 on the stock on concern trade volumes will remain thin this year and forecasted that the investment income will drop significantly.

Retailer Li & Fung declined 7.1% to HK$16.00 on profit taking.

Manulife Financial Corp shed 12.2% to HK$79.00.

Hutchinson Telecommunications declined 11% on market rumors that the company may sell Hong Kong fixed-line and mobile telephone business.