By Gina Lee
Investing.com – HSBC (HK:0005) saw its shares fall almost 3% on Wednesday as the U.S. contemplates measures to sanction banks in the city, as well as de-pegging the USD from the Hong Kong dollar.
HSBC shares fell 2.72% to HK$37.60 ($4.851) by 12:53 AM ET (5:53 AM GMT), after recording a 3.1% drop earlier in the day.
Several top advisors to U.S. President Donald Trump have put a proposal on his desk to decouple the dollar and the Hong Kong dollar after the enaction of national security laws in Hong Kong earlier in the month. Although the proposal has yet to reach Trump, it is said to be facing opposition from some parts of the Trump administration who fear that it would hurt Hong Kong banks as well as the U.S., not China.
The Hong Kong dollar’s peg to the greenback has been in place since 1983.
Should the U.S. decide to remove the peg, HSBC would feel the impact more than other banks in the city such as Standard Chartered (OTC:SCBFF). The city’s largest note-issuing bank would face a higher risk if U.S. measures limited its ability to purchase dollars. Although headquartered in London, the bank derives more than 75% of its pre-tax income from Hong Kong.
The bank’s Asia-Pacific CEO Peter Wong expressed support for the laws in June.
Meanwhile, sanctions against entities enacting the laws that were passed by the U.S. Senate at the end of June are also up for Trump's review.