Can the HSBC share price go back up to 600p?

The HSBC share price was falling even before the pandemic happened. But is it ready for a turnaround now?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

Less than two years ago, HSBC (LSE: HSBA) was trading at 600p levels. It is down more than 33% now. It is easy to chalk this up to the pandemic. After all, banks are vulnerable to business cycles, and HSBC is no different. But that is not all that there is. The HSBC share price story is a complex one. 

Geopolitics and performance

The multinational bank has dealt with quite a set of circumstances in recent years. The US-China stresses were a challenge for the bank, given its interests in both geographies. More tension followed for it as Hong Kong’s handover to China was accompanied by dissent. It did not help that there was unending uncertainty in the UK regarding Brexit. And this is just geopolitics. 

Amid all this, in August 2019, the bank’s then CEO, John Flint, stepped down after just 18 months at the helm. HSBC’s shaky performance was one reason for this, which called for a painful restructuring that included big job losses. And soon after, the pandemic started. It could not get much worse then, really. 

Is the worst over for the HSBC share price?

I do think that the worst may just be over for it now, though, going by the very firm steps it has initiated in the recent past. Between China and the US, HSBC clearly sees a future in China. While it decided to exit its US retail banking operations earlier this year, it has moved its senior management team to Hong Kong. This is a clear indication of its focus on the Asian market

This could result in better numbers for it going forward. Besides this, the easing of Covid-19 also helps. In fact, HSBC’s results for the first half of 2021, released yesterday, clearly show a more than doubling in pre-tax profit because of a base effect. Last year, there was a huge drag on the bank as massive expected credit losses were pencilled in. However, the situation has normalised quite a bit now, which is a huge contrast. 

Its outlook is also somewhat positive. It reports signs of pickup in lending as well as cost reduction. This should be a positive for the HSBC share price, as will its resumption of dividends. Even though the dividend amount is negligible, its return is positive. 

My assessment 

I am cautiously positive on the HSBC share price for now. Its geopolitical stresses may just reduce further. The pandemic will hopefully keep receding. And its restructuring could start paying off. 

There is still much up in the air of course. The bank’s improved numbers are more because last year was poor than because of on-the-ground improvement in its business. I would like to see how its business progresses, which puts it on my investing watchlist. For now though, its share price could improve from here, but I still think it is a long way from 600p.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended HSBC Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Under £14 now, Persimmon’s share price is trading at less than half its fair value by my reckoning

Persimmon’s share price fell a lot over the past year, but I think a new home-building initiative and improved macroeconomic…

Read more »

Arrow symbol glowing amid black arrow symbols on black background.
Investing Articles

Is this FTSE 100 pharma gem now a brilliant bargain?

This FTSE 100 pharmaceutical giant has been hit by fears of US tariffs and litigation over a key product, but…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Is Warren Buffett losing his touch?

Our writer's noticed that Warren Buffett’s investment vehicle has underperformed the S&P 500 during three of the past four years.…

Read more »

Investing Articles

Non-energy minerals are the top performers in 2025. These small-cap FTSE shares are leading the charge

Mark Hartley examines which sectors are doing well in 2025 and the FTSE shares that investors should consider to benefit…

Read more »

Emma Raducanu for Vodafone billboard animation at Piccadilly Circus, London
Investing Articles

Buying 10,000 Vodafone shares generates a passive income of…

Vodafone shares have had a rough ride, with dividends slashed in half. But with its turnaround making steady progress, is…

Read more »

Businesswoman calculating finances in an office
Investing Articles

Buying 1,000 Aviva shares generates an income of…

Aviva shares could be primed to thrive in the long run if its takeover of Direct Line is a success,…

Read more »

Investing Articles

At today’s price, buying 1,000 British American Tobacco shares generates a second income of…

Tobacco companies may not be popular, but the British American Tobacco share price is on the rise, along with its…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

The cheapest UK stock in my ISA is…

This UK stock currently trades at a massive discount to the market. Edward Sheldon believes it's mispriced and that there's…

Read more »