Why HSBC's Hong Kong hegemony is under threat

Here are the signs.

According to CLSA, HSBC is still Hong Kong’s dominant bank, but its position is under threat as the competitive environment intensifies.

The most obvious signs are the loss of market share and core profitability at retail-banking subsidiary Hang Seng Bank.

Here's more from CLSA:

This comes at an awkward time for HSBC, as weak conditions in the West and downsizing its US operations have made it increasingly reliant on Hong Kong’s rich profits. At the group level, HSBC is at fair value for its return profile. 

HSBC has long been the undisputed market leader in Hong Kong. It still is, but the liberalisation of banking regulation (eg, interest-rate deregulation and easing of bank licensing) from 1998 has contributed to an increasingly competitive system in Hong Kong.

The most notable competitive shift in the past decade has been the sustained incursion og mainland banks an, in particular, the continued success of BOCHK