The bank's share price slumped 18.8 percent to 46.25 Hong Kong dollars (5.93 US) in Tuesday trading in Hong Kong, after falling more than 18 percent in London overnight.

The collapse came after the bank on Monday reported a 70 percent tumble in annual net profit last year, mainly due to the dire performance of its US unit.

It also asked shareholders to back a huge rights issue, worth 17.8 billion US dollars, in an effort to shore up its balance sheet.

Despite its worse-than-expected results, many of Hong Kong's richest investors believed the rights issue, priced at 28 Hong Kong dollars, was a great bargain.

Allan Zeman, the developer behind Hong Kong's most famous nightlife district, said he interrupted a trip to Thailand to call his investment agent to subscribe to the offer.

"I think it's a once-in-a-lifetime opportunity," the founder of Lan Kwai Fong Holdings told AFP by phone from Phuket.

Zeman said he had been a customer and investor in the bank for more than three decades and he had full confidence that it would weather the crisis.

"HSBC has not escaped the financial turmoil. But it is less affected than most of the other banks," he said.

But Zeman did not expect its share price to return quickly to the 120 Hong Kong dollar-level reached in September last year. "The world was awash with cash (before the crisis). Every stock was overpriced."

David Tung, Hong Kong's oldest stockbroker, said he would subscribe to the offer and would also advise his clients to do the same.

"I have 100 percent confidence in it. To me, it is the best bank in the world," the 79-year-old told AFP.

Tung, who became a stockbroker at the age of 14, said the bank had a strong capital base and a decisive management team which took quick actions to scale back its US operations when it detected problems with subprime mortgages in 2007.

Some big-name investors also lined up to take advantage of the rights issue.

Lee Shau-kee, chairman of developer Henderson Land and nicknamed "the Asian God of Stocks", told the South China Morning Post he was so confident in the strength of the bank his firm would even act as a sub-underwriter for 2.4 billion Hong Kong dollars of the rights issue.

Bank of East Asia chairman and chief executive David Li said he would also back the issue as a personal investment, the newspaper said.

However, small investors were disgruntled that their stake in the bank would be diluted after the offering. Some analysts also warned that caution should be exercised.

Ricky Tam, chairman of the Hong Kong Institute of Surveyors, told the Post: "Hong Kong investors have been long-time supporters of HSBC but it's time to make a rational decision."

Shin Wing-ching, head of Centaline Property Agency, one of Hong Kong's largest property agents, said he had sold all his stocks in 2007 and would continue to stay out of the game.

"I always feel that the financial analysts who guarantee long-term investors in HSBC good returns are wrong. No one can make that guarantee," he said.

HSBC's chief executive Michael Geoghegan said in Hong Kong Tuesday that the cash-raising was not needed to fill a short-term hole.

"The capital we are raising today is for our future growth in our business either by organic growth or by acquisitions," he told reporters.

"We do not require the capital in 2009 for our internal use."

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