HSBC, Prudential shares rebound after China curbs selloff

HSBC, Standard Chartered and Prudential Rebound After China Capital Control Selloff

Shares of HSBC, Standard Chartered, and Prudential bounced back in London trading on Thursday, partially recovering from a sharp selloff earlier in the week triggered by Beijing’s tightening of cross-border investment rules affecting their Hong Kong operations.

Prudential climbed 4.60% to 968.84p in morning trading, while HSBC and Standard Chartered also posted gains above 2%. The recovery followed declines of between 4% and 6% earlier in the week, when reports emerged that mainland Chinese residents were facing tighter restrictions on opening offshore accounts at major Hong Kong banks.businesstimes

What Triggered the Selloff

The slide began after the South China Morning Post reported that Bank of East Asia’s Shanghai branch had suspended opening accounts for mainland clients that could be used for overseas investments, with HSBC warning that funds deposited in investment accounts must comply with Hong Kong regulatory standards. Standard Chartered fell as much as 7% and Prudential dropped more than 8% during Thursday’s initial selloff on June 4.yahoo

The moves came amid a broader crackdown by Beijing on what it termed “illegal” cross-border trading. Online brokerages Futu, Tiger, and Longbridge announced they would stop letting mainland clients open or add to positions and move money into accounts starting June 12. China’s State Council also published new Regulations on Outbound Investment on June 1, set to take effect July 1, introducing full-process supervision of overseas investment activities.china-briefing

Analysts See Limited Revenue Impact

JPMorgan moved to calm investor fears, estimating that business related to Mainland China Visitors would contribute only about 2% of HSBC’s and Standard Chartered’s revenue in 2025. The bank noted that both stocks had underperformed the Hang Seng by several percentage points since the restrictions emerged but suggested the market reaction was overdone relative to the actual business exposure.aastocks

The selloff had wiped billions off market capitalizations of Asia-exposed financial firms listed on the FTSE 100, with AIA Group also falling 6.8% in Hong Kong in its worst session since March. Thursday’s recovery suggests investors are beginning to differentiate between headline risk and the more modest direct revenue impact from mainland Chinese clients using Hong Kong as an offshore wealth hub.yahoo