HSBC leaves China with new deals

A pedestrian walks past a sign showing the HSBC lion at its headquarters in the central financial district of Hong Kong, China, August 4, 2020. REUTERS / Tyrone Siu – RC207I96XPCZ

HONG KONG, Jan.6 (Reuters Breakingviews) – Perceptions matter for profits in China, or at least for Western banks entering its vast markets. News on Wednesday that HSBC (HSBA.L) may soon take a larger stake in its Chinese securities joint venture came just a week after Beijing approved the acquisition of full ownership of its mainland co-ownership insurer. While China’s approval process is often difficult to read, both moves and other developments imply that a tough time for the Asia-focused lender is coming to an end.

HSBC has been widely seen as being out of favor since 2019, when it was revealed to have passed on information to U.S. officials about telecommunications equipment titan Huawei. Abandoned deals followed, Reuters reported citing sources. More recently, however, the bank played a leading role in the Hong Kong introduction of SenseTime (0020.HK) – a mainland artificial intelligence company blacklisted by Washington mid-term, and it now has the option to buy an additional 39% of its securities business after its public partner said it wanted to sell. Progress in China is never quite linear, but HSBC appears to be headed in the right direction. (By Jennifer Hughes)

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Editing by Una Galani and Katrina Hamlin