China's Ping An Insurance Group has increased its stake in UK bank HSBC - buying into the unprecedented dip in the bank's share price. The insurer reportedly purchased the stake in the open market after HSBC's share price sunk to its lowest in more than two decades.
Ping An Insurance, the world's largest insurer by market value, purchased 10.8 million HSBC shares. According to a filing last week, Ping An paid an average price of around HK$28.28 per share. This equates to about $305.5 million. The highest price that Ping An paid was about HK$28.80 per HSBC share.
The stock purchases were made through the company's investment management arm, Ping An Asset Management. The additional shares bring Ping An's total stake in HSBC from 7.95% to 8%. A separate filing over the weekend showed BlackRock, Inc. was right behind Ping An as one of HSBC's major shareholders with a 7.14% stake.
In response to questions over the reasoning behind the recent stock acquisition, a Ping An representative said HSBC had always been a "long-term investment" for the company.
Last week, HSBC's stock price sunk to a low of HK$27.50 per share. The price was the lowest it had been since May 1995. As of Friday, HSBC's stock price has dropped by more than 53.7% since the start of the year. This equates to about a HK$643 billion in lost market valuation.
The drop in HSBC's share price began after the bank was implicated in a U.S. investigation into Huawei Technologies' transactions along with transactions made by other companies from China. This led to reports predicting that HSBC could be targeted by China authorities and possibly slapped with heavy sanctions.
HSBC, along with other international lenders, was named in a report published by the International Consortium of Investigative Journalists. The British bank was accused of being involved in money laundering activities and other unscrupulous transactions. Other banks named in the report included HSBC competitor Standard Chartered.
