On September 26th, two years later, Ping An Insurance stepped in again, spending 300 million yuan to increase his stake in HSBC again on September 23, the first time that HSBC has increased its holdings in the open market since November 2018. At a time when HSBC plummeted, why did Ping an step in? how miserable is it to invest in HSBC for more than three years?

Just now, Ping an stepped in and became the largest shareholder again.

According to the Hong Kong Stock Exchange, Ping an Capital Management, a subsidiary of Ping An Insurance, stepped in again, spending HK $300m to increase its stake in HSBC from 7.95 per cent to 8 per cent, with an average price of HK $28.2859 and HSBC's closing price of HK $28.2.

In increasing its holdings of 10.8 million shares, Ping An Insurance once again became the largest shareholder of HSBC, surpassing Blackrock's 7.14%. The data show that the last time Ping an Capital Management sold was on November 1, 2018, when it bought 5.3756 million shares at an average price of 65.1153 Hong Kong, increasing its shareholding to 7.01%.

However, HSBC Holdings PLC's main shareholder is American Capital. At present, Blackrock holds 7.13%, JPMorgan Chase & Co 3.87% and Bank of New York Mellon 4.99%.

Ping an's relationship with HSBC dates back to 2002, when HSBC subscribed for a 10 per cent stake in Ping an at a cost of $600m (about 5 billion yuan), the largest foreign investment in the domestic financial sector at the time. Since then, Ping an and HSBC have carried out fruitful exchanges and cooperation in many areas, including the establishment of a comprehensive financial backup platform that is the largest in Asia and represents the most advanced international level, and further improved the corporate governance structure and risk control system. The entry of HSBC has provided a wealth of experience for Ping an's rapid growth into a world-class integrated financial group.

In December 2012, as a result of its strategic adjustment, HSBC transferred all its stake in Ping an and said: "Ping an is one of HSBC's most successful investments in the past decade. We are pleased to have the opportunity to share the great value of China's economic and financial development and the rapid growth of Ping an. We believe that on the existing basis, Ping an can seize the favorable opportunity of the rapid development of China's economy and financial industry, maintain the steady development of various businesses as always, and eventually become a leading international integrated financial group. "

However, after a lapse of three years, Ping an became a shareholder of HSBC instead.

Ping an's increase in HSBC can be traced back to December 2015, when domestic capital continued to buy HSBC Holdings PLC through Hong Kong Stock Connect, and some investors analyzed that many of them may have been done by Ping an.

The official purchase of HSBC by Ping an was on December 5, 2017. on the same day, Ping an bought 10 million shares of HSBC, increasing its shareholding to 1.018 billion and its shareholding to 5.01%.

Huihang said that it has a long-term and friendly cooperative relationship with Ping An Insurance, and I welcome Ping an to become a long-term investor.

Ping An Insurance said that investment exchange control is a financial investment. Currency control has excellent operating performance and good dividend, which is in line with the asset-liability matching principle of insurance funds managed by Ping an.

Since then, all the important shareholders of HSBC Holdings PLC have been made by Ping An Insurance.

Subsequently, Ping an launched a series of holdings. On February 9, 2018, Ping an increased its stake in HSBC by 37.22 million shares, further increasing its shareholding to 6.17%. On November 1, 2018, Ping an increased its stake in HSBC by 5.3756 million shares, surpassing Blackrock to become HSBC Holdings PLC's single major shareholder, holding 1.419 billion shares, accounting for 7.01%. Around September 2019, Blackrock held more than 7.01% of the shares and re-became the largest shareholder.

Since then, the news about Ping an increasing its stake in HSBC cannot be seen in the open market, but until this increase, we can see that Ping an has always been a major shareholder. Ping An Insurance had already owned 7.95% of HSBC before this increase. Blackrock has been between 7% and 7.3%.

Why does Ping an increase its holdings in HSBC this time? how miserable is it to hold shares in HSBC?

Ping an stake is described by HSBC as one of the most successful investments, but is Ping an holding HSBC one of the worst investments? Previously, we have calculated how much Ping An Insurance has lost on his stake in HSBC since his investment in 2017. We will briefly calculate as follows:

Since the beginning of this year, Ping An Insurance has plummeted continuously. By the close of trading on September 25, HSBC Holdings PLC fell 52.25% this year, halving its market capitalization and currently only HK $583.5 billion. At the beginning of this year, Tencent was less than three HSBC in size. 10 months later, Tencent surpassed the size of eight HSBC.

What exactly happened to HSBC? The reasons for the collapse of Sina Hong Kong shares to HSBC are summarized as follows: 1) the core reason is the cancellation of dividends, harming the interests of minority shareholders, causing Hong Kong Love shares to become the number one target for sale in Hong Kong. 2) set up Huawei, destroy the orderly competition in the market, and become the outcast of the market. 3) the epidemic situation and the geographical situation hit the normal business of the company, which aggravated the decline of the company's performance. 4) HSBC is involved in a "Ponzi scheme", becoming a hotbed of financial crime or facing economic sanctions.

Ping An Insurance, as the largest shareholder, naturally bore the brunt and suffered heavy losses. Prior to this, we calculated an account for Ping An Insurance. Ping An Insurance invested in HSBC with a floating loss of at least 36.2 billion, and only a floating loss of 40 billion this year.

In terms of income, Ping An Insurance held 7.01% of the shares, or about 1.419 billion shares, at the end of 2018, earning 4.98069 billion yuan, or HK $5.658 billion, in 2018 dividends, and HK $3.385 billion after 2019 dividends. Based on this calculation, Ping An Insurance's dividend income is about HK $9.043 billion (there are no public figures, regardless of the change in Ping An Insurance's shareholding in 2019).

In terms of expenditure, Ping An Insurance's latest shareholding is 8%, with 1.65548 billion shares, and the cost of holding is about HK $60. Even at the lowest cost, Ping An Insurance lost at least HK $36.2 billion on his investment in HSBC.

On December 6, 2017, Ping An Insurance's Ping an Capital Management bought a total of 1.018 billion shares of HSBC Holdings PLC through the Hong Kong Stock Connect channel, with a shareholding ratio of 5.01%. On the same day, it bought 1000 shares at a cost of HK $77. It is worth noting that in 2017, HSBC Holdings PLC's lowest price was HK $61.80 and the highest price was HK $80.40. The cost price of Ping An Insurance's stake in HSBC is likely to be much higher than HK $60.

Ping An Insurance's last increase occurred on November 1, 2018, when Ping an Capital Management of Ping an Insurance (02318) surpassed Blackrock to become HSBC's largest shareholder, holding about 1.419 billion shares, accounting for more than 7 per cent of its shares, at a cost of HK $65.1153. Similarly, HSBC Holdings PLC's share price was between HK $60.35 and HK $86 in 2018, and Ping An Insurance's shareholding cost was more than HK $60.

Ping an is likely to buy 226 million shares of HSBC through the private market from the end of 2018 to 2020 at a cost of between HK $27.50 and HK $70.50, with the final purchase cost of HK $28.2869.

At the last 226 million shares, even at HK $30, Ping An Insurance's cumulative cost of buying HSBC was at least HK $91.9 billion. Ping An Insurance's 1.65548 billion shares have a book market capitalization of only HK $46.7 billion, which means Ping An Insurance has lost at least HK $36.2 billion since he joined HSBC. Ping An Insurance's 7 per cent stake in HSBC has suffered a book loss of HK $43.8 billion so far this year.

This can also be seen in the company's interim report, which showed a short-term volatility loss of about 2 billion in 2020, compared with a net increase of 13 billion in the same period last year, a gap of 15 billion yuan (RMB). Similarly, according to the fair value change in the company's total investment income, the company made a profit of 27 billion last year to a loss of nearly 5 billion this year, a gap of 32 billion yuan (RMB).

According to the company's financial report, the company's financial assets measured at fair value and whose changes are included in other comprehensive income are 26.9 billion yuan (HK $30.6 billion) less than in the same period last year, which is equivalent to the company's floating loss of HK $32.2 billion on its investment in HSBC as of June 30.

Why did Ping An Insurance hit "HSBC in the Whirlpool" again?

Recently, HSBC Holdings PLC has been at the forefront of the "wind and waves". The company is facing not only the impact of the epidemic on its performance, but also the abandonment of Hong Kong investors, and a deeper whirlpool of financial crimes against money laundering.

On April 1, the Bank of England issued a notice requiring the British banking sector to stop paying dividends, including British banks such as HSBC and Standard Chartered, to cancel the final dividend of last year at the request of British regulators. quarterly or interim interest payments will be suspended before the end of this year, and no share buybacks are allowed.

According to the news, HSBC Holdings PLC's share price plummeted 10%, and minority shareholders formed the "HSBC Minority shareholder Rights Alliance" and launched a number of actions to safeguard their rights, put forward three major demands, and went to court, but finally came to nothing.

Yan Zhaojun, an international strategist at Sino-Thai, told Sina Finance that the return on holding HSBC Holdings PLC for 10 years went back to zero.

Sina Hong Kong stock statistics wind data found that if the time is extended, on March 31, 2010, the closing price of Huifeng was HK $79.9, which is currently quoted at HK $28.2, while HSBC's total 10-year dividend is Rmb29.63, which is equivalent to HK $32.34 at the current exchange rate (excluding exchange rate changes). In other words, HSBC shareholders still lose HK $19.36 per share after 10 years, and return to zero for 10 years is still at a loss.

Qi Yaonian, chief executive of HSBC Holdings PLC, said that the economic impact of the novel coronavirus outbreak on HSBC customers was the main factor leading to changes in financial performance so far this year.

On August 3, the company released its results for the first half of 2020, in which the profit attributable to the common shareholders of the parent company was $1.977 billion, down 76.8% from the same period last year and 22.1% from the previous month. Basic earnings per share were $0.1, down 76.2% from the same period last year; no dividend was paid.

HSBC suffered a severe global decline, with its Asian business performing best. Europe lost $3.06 billion, up 488.5 per cent from a year earlier, but narrowed its loss by 26 per cent from a month earlier. Asia recorded a profit of US $7.369 billion, down 24.7% from a year earlier; the Middle East and North Africa lost US $26 million (a profit of US $1.736 billion in the same period last year); North America made a profit of US $23 million, down 96.9% from a year earlier, up 9.5% from a month earlier; and Latin America recorded a profit of US $12 million, down 98.2%.

To this end, the company laid off a large number of people. On June 17, CEO Qiyao Nien issued a memo to employees around the world, saying that the bank had to resume its layoff plan because of declining profits and economic forecasts for the future. The total number of employees is expected to be reduced from 235000 to 200000 in the medium term. According to the company's interim report, the company still has 230000, 2764 employees and has cut 2587 this year.

In mid-to-late September, the English edition of the Global Times quoted some experts, including Apple Inc, Huaizhong and FedEx Corp, who may be the first batch of foreign companies to be included in the list. However, Apple Inc also rose 3% on the same day, and FedEx Corp also fell by less than 1%, so the news had little to do with the HSBC slump.

Since then, the HSBC scandal, HSBC, Standard Chartered, Barclays and other large multinational banks involved in money laundering scandals.

The classified documents of the US Financial Crime Enforcement Network Bureau (FinCEN) were leaked on Sept. 20, when international organizations and media revealed that a number of multinational banks were suspected of transferring illegal funds to provide financial services to high-risk clients around the world. The financial institutions involved include: HSBC, Standard Chartered Bank, Deutsche Bank, JPMorgan Chase & Co Bank, Bank of New York Mellon and so on.

In response to the incident, HSBC issued a statement saying that it "will not comment on suspicious activity reports" and pointed out that "since 2012, HSBC has invested a lot of resources to improve its ability to prevent and combat financial crimes. At present, a sound early warning system has been set up in more than 60 countries and regions around the world."

Under the attack of multiple negative news, why did Ping An Insurance strike again at this time?

Pang Ming, chief strategist at Huaxing Securities, said that Ping An Insurance's long-term financial investment in insurance funds should be optimistic about the financial investment value of HSBC shares. At the same time, Ping an increases its holdings at a low price, which can reduce the company's average position cost.

He said that if Ping an takes HSBC as a financial asset at fair value and its changes are included in other comprehensive income, then the fluctuations in HSBC's share price will not affect Ping an's current operating profit, but will affect its net assets by taking into account Ping an's other comprehensive income.

Yan Zhaojun said that in addition to cheap valuations, it could also be understood as the mainland sending a signal to the market to clarify rumors that currency controls were included in the "list of unreliable entities" in order to stabilize market confidence. In addition, it is believed that in the past, the increase in its holdings was mainly focused on its long-term and stable dividend, increasing the allocation of long-term assets, so as to smooth the duration of Ping an assets and liabilities. This year, under the guidance of the regulatory authorities of the Bank of England, currency control temporarily suspended dividend payouts. It is expected that local dividends can be resumed next year.