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London-based hedge fund Qube Research & Technologies has taken a £670mn bet against HSBC shares, in one of the biggest short positions on a big four UK bank recorded by regulators.
The position, which equates to 0.57 per cent of HSBC’s market capitalisation, comes after a strong run for the bank’s shares, which have gained about 18 per cent so far this year. The position was taken on Tuesday, according to data reported to the Financial Conduct Authority.
Qube is a quantitative multi-strategy hedge fund firm that takes bets across a range of markets and strategies. The firm did not respond to a request for comment. HSBC declined to comment.
The bet is one of the biggest ever taken against a big four UK bank, according to FCA data. The last time a hedge fund took a short position above the disclosure threshold against HSBC was when Ray Dalio’s Bridgewater shorted the stock in early 2018. Bridgewater’s short position was smaller in percentage terms but a similar size in sterling terms.
“It is unexpected to see Qube with a disclosure of this size,” said Ivan Ćosović, founder of data group Breakout Point.
HSBC has enjoyed an uplift in revenue largely driven by the sharp increases in interest rates that began almost two years ago. With higher rates, the bank has made more money by lending out customer deposits.
But there are still challenges for the bank, given its exposure to the Chinese economy, which has so far failed to rebound strongly from stringent Covid-19 lockdowns.
HSBC’s largest shareholder, Chinese insurer Ping An, previously pushed the bank to split and list its Asia business, arguing that it had become too difficult to manage rising tensions between the west and China.
Ping An’s proposal was rejected by 80 per cent of shareholders in May at the bank’s annual meeting.
Qube was spun out of Credit Suisse’s asset management arm in 2018 and is managed by chief executive Pierre-Yves Morlat and chief investment officer Laurent Laizet. According to company filings, the firm paid its 343 employees £272mn in wages and related benefits last year. That was up from 229 staff in 2021, with staff costs at £105mn.