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Only Free Lunch

Lacking social security aside, the incident also exposed numerous cases of overloaded concentration risk with one enraged investor alleging that he had invested his entire savings to HSBC. Many others claim to significantly depend on the dividend of this one listed company for survival.

This is yet another echo of Asia’s tendencies against diversification, traditionally characterized by heavy home bias via lacking investment in non-Asia markets. Hong Kong investors are amongst the worst offenders of concentration risk and the recent HSBC dividend cancellation fiasco further exposes the dire need to not put all of Hong Kongers eggs in one basket or even a few baskets.

«Profound Regret»

Whilst HSBC shows no sign of resisting U.K. regulators and has reiterated its commitment to London has its headquarter, the British lender continues to engage investors, acknowledging the added economic struggles caused by the scrapped dividends.

«We profoundly regret the impact this will have on you, your families and your businesses,» said HSBC chief executive Noel Quinn in a rare letter directly addressing Hong Kong shareholders. «We are acutely aware of how important the dividend is to our shareholders in Hong Kong. We deeply value your support as a shareholder and we never take that for granted.»

In addition, Quinn and the bank’s chief financial officer, Ewen Stevenson, will waive their 2020 cash bonuses and donate a quarter of their salary for the next six months to charity totaling $197,300 and $93,000, respectively. HSBC chairman Mark Tucker will also donate his entire $1.88 million salary for 2020 to charity, according to a «Reuters» report citing an internal memo.