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The View | Calls to break up HSBC are a bleak sign of things to come for our once-global economy
- An East-West split of the banking giant risks leaving it hollowed out, but more worrying is what such a move could mean for globalisation
- It is the latest sign of growing restrictions on the freedom of movement of capital and people that has defined the global economy over the past 30 years
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It has been a very unusual week in a very unusual year. The temperature in Hong Kong dropped to its lowest May level in 105 years – so much for global warming – only a few days after the Hong Kong Observatory issued its earliest ever hot weather warning when the mercury cracked the 35-degree-Celsius mark. Strange things are happening in this age of transition.
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The Chinese look to predict earthquakes by the braying of dogs and the emergence of snakes, so it’s no wonder that soothsayers, prophets, or indeed financial economists look at signs and phenomena. Of course, if they were mostly right, they’d be lying on a beach holding a drink with an umbrella in it.
Nevertheless, the signs are not those of stability but of noisy change, such as the highest inflation in 40 years, the worst month on Wall Street in 52 years, the US long bond breaching 3 per cent yield, and the first full-scale inter-nation European war in 80 years. This is a wild shot in the dark – but do you think they could be telling us something?
And yet, sometimes, we financial economists get it right. In October 2020, I forecast in my Post column that “it would be unsurprising if the Hong Kong and China operations of HSBC developed a separate Chinese majority ownership”.
I noted that the huge Chinese insurance company, Ping An, had just boosted its stake as HSBC’s largest shareholder. So, it should come as no surprise that Ping An has been calling for the 157-year old global bank to be split into Asian and Western operations.
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Such a deal has been applauded by many commentators. After all, HSBC’s management themselves are gung-ho on pivoting (even more) to Asia and shifting the focus from commercial banking in the US and France to wealth management in China.
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