HSBC's HK stock jump on threatened HQ move

HSBC's Hong Kong-listed shares climbed as much as 6 per cent on Monday as investors welcomed the events of an action-packed Friday that saw the bank threaten to shift its headquarters out of London.

HSBC attracts one of the biggest bank levies, a tax applied by the UK and based on its global balance sheet. Its $1.1bn UK bank levy is scheduled to rise to $1.8bn under the current government or nearly $2.3bn under Labour plans - adding piquancy to the timing of HSBC's announcement, just ahead of UK elections.

Shares in HSBC, listed in Hong Kong, were recently 4.1 per cent higher at HK$76.80 in morning trading on Monday, a six-month high. If that gain is held, it would make for the biggest one-day rise since August 2009.

The jump outpaced the 1.3 per cent gain on the Hang Seng index benchmark. Shares listed in London opened up 2.8 per cent at 647.5p, a move which stood in contrast to the FTSE 100 index, which fell 0.4 per cent at the open.

Trading volumes jumped in Hong Kong, with more than 121.7m HSBC shares changing hands in Hong Kong - the most since March 2010 when 137m shares were traded.

The Hong Kong-listed stock is up 16.3 per cent so far this month. On current form, the bank is eyeing its best monthly performance since a 17.4 per cent rise in July 2009.

Hong Kong is seen as the most likely venue for HSBC to move its headquarters, and the territory's regulator said it would welcome the bank even though its balance sheet is nine times the size of the country's $290bn GDP.

The Hong Kong Monetary Authority said it would take a "positive attitude" if HSBC did consider a shift to the territory.

A move back to Hong Kong would be a return to its roots for HSBC, where it was considered the territory's de facto central bank before the HKMA was set up. It is also still the city's largest lender, responsible together with Hang Seng, its subsidiary for about a third of all deposits and lending.

HSBC has been through a string of scandals in recent years, including Mexican money laundering, global sanctions breaches, insurance mis-selling and foreign exchange manipulation.

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