HSBC shares plunged 18.8 percent to an 11-year low in Tuesday's trading in Hong Kong, one day after the banking giant asked shareholders for a US$17.7 billion cash boost in the wake of a 70 percent drop in profit.

The shares of HSBC ended at 46.25 HK dollars after opening at its lowest level since the 1998 Asian financial crisis, matching similar sell-downs in both the bank's London and New York-listed shares. About 5.6 billion HK dollars worth of the bank's shares changed hands, accounting for around 13 percent of the market's total turnover.

Hong Kong's benchmark Hang Seng Index ended 283.58 points lower at 12,033.88, with HSBC alone accounting for a 258 points drop.

As one of the world's biggest banks and financial service institutions, HSBC reported a 70 percent drop of net profit in 2008 as bad debts rose in the U.S. consumer business. The UK- lender said it will raise US$17.7 billion from its shareholders through a large rights issue.

Also on Monday, HSBC cut its dividend for the full year by 29 percent to 0.64 U.S. dollar and said it would close its troubled U. S. consumer loans business.

Some analysts believed that the rights share issue was expected to strengthen HSBC's capital base.

Citigroup issued a research report in Hong Kong on Tuesday in which analysts said the combination of capital strength, liquidity and geographic reach should leave HSBC well positioned strategically to benefit from any recovery in global banking markets.

However, DBS bank's experts were relatively pessimistic about the share price. They said there could be further loan provision or even impairment relating to the acquisition of HSBC Finance if the U.S. economy continues to weaken and thus cut HSBC's target price and downgraded the share to "sell".

(Xinhua News Agency March 3, 2009)