Artificial boost for HSBC is a curse in disguise

The recent rumor that China Investment Corp (CIC) will invest in HSBC and the bank's listing in Shanghai has given the stock price a real boost. But if you think about this with a cool-mind, then it might probably be a curse in disguise. Why? Consider the following.

HSBC's stock price has badly or very badly performed particularly in the Hong Kong stock Casino. This bad performance actually started since 2005 and the bank's stock fell the most when all other financial/banking stocks were flying up.

Nothing shows any encouraging signs especially the bank's management split after the changes in leadership in 2007. We have new local figures in Asia promoting their pro-China images but sadly, if you know what other banks have been doing inside Mainland China, you should know how backward or late such pro-China move made by them is now.

Indeed, the pro-China move or rather the very late pro-China move (better late than never) shows the lack of vision of the local Asian team. I am not joking; some local staff in Hong Kong cannot even tell me how to operate the bank accounts in Shenzhen through the Internet or telephone. Well, this means the bank can only develop its pro-China image by relying on talents in Mainland China and definitely the team in Hong Kong must not be put in the spotlight!

Yes, talents in Mainland China are very good and some say they are much better than workers in Hong Kong. I tend to agree because even local companies in Hong Kong offer higher pay to Mainland Chinese. In fact, since many Mainland Chinese are keen to absorb Western culture, use English and learn everything about the world around us, they are proving to be the leaders of the future generation. When compared with the local younger generation in Hong Kong, you may scream when you see them playing video games and learning nothing except meaningless news about entertainment stars and singers everyday! By the way, Mainland Chinese also work very hard too.

The recent surge in the bank's share price reflects exactly how weak and vulnerable HSBC has become! Why? Without the use of rumor re pro-China development, the bank and its performance in the eyes of investors may appear to be a big elephant standing in a hot desert with a futile future. Watch it: it is NOT the bank's fundamentals that boost the stock price and investor confidence; it is just a "pro-China" rumor which is unsupported by any official public disclosure from the bank! Typical GIMMICK played by speculators in the Hong Kong Stock Casino. Since the bank does not issue any public disclosure to investors, this will only breed more price manipulations and perhaps insider dealings making use of undisclosed pro-China information or rumor. Well, using rumors or spreading them is one of the easiest (an absolute no-brainer) means to raise a dead fish back to life again in the Hong Kong Stock Casino.

Once we pierce through the pro-China rumor, then we can see how naked the bank is. The pro-China team in Hong Kong is a good show to shine the shoes of Mainland China but come on, people in Beijing are not naive...What good can the bank offer to Mainland China? Very little except a first listing of an international bank in Shanghai to boost the status of SH as China's financial centre (usurping the Hong Kong Stock Casino if not already). Lots of foreign international banks are already operating in China and HSBC can hardly offer anything unique or better except to list to worship the good name of Shanghai. Well, that is why HSBC cannot afford to split into one Asian operations and one Western operations; any move diminishing its foreign background from the West will take away the bank's appeal or rather ability to shine the shoes of Shanghai, Beijing, etc.

If you have better use of your money, avoid the shares of HSBC. Save up your money to buy the bank's shares when it can be listed in Mainland China. But don't expect the performance to be better than other Chinese banks. Why? By the time when HSBC can list in Shanghai, other Chinese banks may have already usurped HSBC whether in Hong Kong or other parts of Asia!

Sometimes, it takes a contrarian view to get yourself out of unrewarding investment. But go ahead and join the speculation if you really want to risk; there is a chance you can take a little profit before the rumors settle down.