Yesterday (March 9) HSBC Holding, Europe's biggest bank, and an Elephant in Hong Kong Hang Seng Index plunged 24% to HK$33, its lowest level since 1995. Since the beginning of financial crisis, many Hong Kong people believe that the city will not be hit directly by the tsunami (partly because of China factor). However, as HSBC has been viewed as the foundation of Hong Kong's economy, the plunge to HK$33, is a hard hit to people's confidence.
A cable TV economic news commentator could not help shedding tear when the price was down to HK$33 during the auction period in the last minute before the market closed. The clip was circulated widely via youtube and becomes a hot topic today:
I got the call from A in the morning, he said HSBC's stock price performed poorly, but still hold on to HK$38. In this level, he had already lost one third of his HSBC investment, if it kept on falling, he was not sure whether he should take up the rights issue.
B said the plunge to such level is not only an individual corporate problem. This is a matter of Hong Kong people's confidence: Hong Kong people in general believe that even the whole world falls, HSBC won't fall. That's why in the past few month, whenever HSBC was in a critical stage, individual stock holder will buy in to keep its stock from falling. HSBC and individual stock holders’ lives are connected.
Coffee time with C. With the stock price at HK$33, he had lost two third of his investment still he planned to take up the rights issue. However, his two children are studying in U.K and Cananda and he once planned to retire in 8-10 year time by living on interest from HSBC and Hang Sang bank. Now, his hope is gone and he has to face the cash flow problem because of the rights issue. He has decided to cut his consumption, including his trip in Easter holiday.
Then it comes a religious phone call. He believes that soon after the government demolished the star ferry pier, HSBC's stock price keeps falling. It is obvious that the Star Ferry Pier has destroyed HSBC's fengshui. For the sake of Hong Kong and individual stock holder, he demanded the government to rebuild the star ferry to its original site…
For a few decade, Hong Kong people valued HSBC's stock like cash and it guaranteed high interest return. Stable and secured. Yesterday, it plunged HK$10.5 to HK$33, no wonder stock commentator shed tear in front of the camera and the whole island mourned for the tragedy. I have already sold out all my HSBC and made a small profit long ago. Now I only has some odd lot at hand and I don't care about them. Can leave it to my son. However, many Hong Kong people have been benefited from their parent's investment on HSBC, depending on its interest for school fee and daily expenses.
In the past, when I came across these friends, I would praise them for their good luck but will also wonder if that's the way to live. Now, I reflect upon the same question and feel that this tsunami is a challenge to the successful people. In the past, we thought we know, and we believe in certain people, institutions and systems. With this crisis, we find ourselves don't know and not able to trust anymore. What are all these thing for? I don't want to convince anyone, but I tell myself the world want to let us know:
Ev'rything which derives from karma
are just like a dream, a mirage, a bubble, a reflection,
a drop of dew or a lightning flash,
which is a way a man of insight should take. (translation from zftrans)
Today, HSBC's stock price bounced back to about HK$38 and Hong Kong Exchanges and Clearing Limited Securities and Futures Commission is reviewing the last minute auction arrangement before market close.
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I think all of us should open our eyes and face the truth and stop deceiving ourselves…
HSBC just like other thousands of stocks traded around the globe has been affected greatly by the Global Financial Crisis and Tsunami….
But from time to time we should learn from history, because history tends to repeat itself…
So, my advice comes from Warren Buffet:
Be greedy when others are fearful, and Be fearful when others are greedy…
Amazing Chinese Tales: