Aug. 5 (Bloomberg) -- HSBC Holdings Plc, Europe's biggest bank by market value, will increase investment in Asia-Pacific as it derives an increasing share of revenue from the region, said Vincent Cheng, chairman of the Asian unit.

``There will be further investments as there are still a lot of business opportunities,'' Cheng, 60, said in an interview with Bloomberg Television today, without elaborating. ``The outlook is uncertain but we still believe there'll be good growth in Asia.''

The Asia-Pacific region contributed 65 percent of pretax profit in the first half following losses in North America, the London-based bank said yesterday. HSBC reported the steepest earnings drop since 2001 on record subprime mortgage defaults in the U.S. and said profit growth from emerging markets will fall.

``It's the right move,'' Nancy Lee, who helps manage $500 million as assistant director at Taifook Asset Management Ltd. in Hong Kong, including HSBC shares, said today. ``Banks are trying to create more value in the emerging markets and acquisitions are the fastest way.''

HSBC fell 2.1 percent to HK$126.70 at 12:17 p.m. in Hong Kong today, set for its biggest fall in three weeks. It has dropped 3.8 percent this year as the local benchmark Hang Seng Index plunged 20 percent.

During the first half, HSBC announced plans to acquire 73.2 percent of Indian brokerage IL&FS Investsmart Ltd. for 10.03 billion rupees ($237 million), and is in talks to buy Lone Star Funds' 51 percent stake in Korea Exchange Bank for $6.02 billion.

Emerging markets will ``hold up reasonably well, albeit with less momentum, than in the recent past,'' Chairman Stephen Green said yesterday.

Korea Exchange Bank

HSBC is in talks to cut the purchase price for the stake in Korean Exchange Bank, two people familiar with the matter said yesterday. Asian stocks have fallen 18 percent since Lone Star Funds agreed to sell the stake for $6 billion in September.

``We are always committed to Korea,'' Cheng said today, when asked if HSBC would consider buying another bank in the country if the KEB deal fails.

HSBC said yesterday it is negotiating with Lone Star after a second deadline for regulatory approval of the purchase expired on July 31. HSBC and Lone Star, led by managing partner John Grayken, had rights under an April agreement to terminate the deal if regulators hadn't cleared it before the deadline. Regulators have delayed approval until legal wrangles are resolved.

Hiring Is Easier

Hiring has become easier for HSBC as competitors reduced staff to cut costs, Cheng said today. The bank is adding 3,000 employees a year in China, where it has 70 outlets and plans to open three more rural banking units this year, he said.

The bank also hopes to be able to issue debit cards in China this year, Cheng said. HSBC lagged behind smaller Hong Kong rival Bank of East Asia Ltd., which became the first foreign lender to issue debit cards in China. Debit cards enable lenders to add automatic teller machines and online banking services in China.

HSBC yesterday reported a 29 percent decline in six-month profit to $7.7 billion, or 65 cents a share. Green said the outlook was ``highly challenging.''

JPMorgan Chase & Co. cut its per-share earnings estimates for the bank in 2009 by 6.1 percent.

``HSBC faces a considerable growth drag'' due to almost 75 percent of its loan book being in the U.S. and Europe, JPMorgan's Hong Kong-based analyst, Sunil Garg, said in a report today. He maintained an ``underweight'' rating and price target of HK$110 for the bank.

To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net

Last Updated: August 5, 2008 00:33 EDT