Will the HSBC share price break out of the £400-£450 bracket in 2021?

HSBC have reported good profits in their second quarterly report. In this article, I examine what effects this may have on the HSBC share price.

| 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.


Image: Public domain: Fair use

The HSBC (LSE: HSBA) share price has traded between £400 and £450 throughout the year, with a couple of short-lived pushes above £450 in March and April. 

As I’m writing, the share price currently sits at £402.65 and I’m quite optimistic that it is set to break out of the range that I just mentioned. However, I’m more interested in the question of whether the international banking firm can build some serious momentum towards the end of 2021.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

Here I give my analysis on whether HSBC might be able to break above £450 in the months to come.

The bullish case for the HSBC share price

One of the reasons why I think the HSBC share price could be set to rise is because of the bank’s excellent second quarterly report. The bank was able to beat its expectations while the global economy recovers from the pandemic. Its pre-tax profit has doubled since this time last year to $10.84bn, beating its $9.45bn expected mark.

HSBC has also reinstated its dividends again at 7 cents a share with the bank’s policy to pay out 40%-55% per share in 2021. Arguably this is quite an underwhelming return when compared to its competitors such as Barclays and NatWest. Nevertheless, the return of dividends is a good sign for shareholders. 

Further, I think HSBC’s international presence in Asia has helped its recovery. Its presence comes with a recent $6bn investment in Hong Kong, China, and Singapore. It’s no surprise then that HSBC shares in Hong Kong rose 3% when earnings were released.  

Out of the five big banks listed on the London Stock Exchange, I believe HSBC has the most long-term growth potential. I’ve lived in China for three and a half years and have seen the financial prowess of the growing Asian middle-class first-hand. The growth of tier two and tier three cities in China is developing rapidly, especially in areas such as digitalised technology. HSBC’s long reputation in the country means it can provide wealth management for these rising affluent families. 

Risks and concerns

While HSBC’s position in Asia gives it access to an ever-growing market, I think it is reasonable as a potential shareholder to be concerned over geopolitical tensions. The disputes between the West and China over the Uighur training centres and Hong Kong riots could lead to a disintegration of economic unity.  This would be very bad news for the HSBC share price. 

Another one of my concerns regards the highly competitive nature of the Asian banking market. With China-centric banks such as ICBC and China Construction Bank, HSBC could lose out to locals who might be feeling more patriotic as tensions rise. 

Will I be buying? 

While geopolitical issues may arise in the future that could prove catastrophic for HSBC, I think that at a price of £402.65 it is hard for me to not add this stock to my portfolio. 

In my opinion, I think the HSBC share price will rise towards the £450 end of the spectrum, especially since profits are up, and because I believe that the bank is on the road to recovery. Will it break £450 by the end of the year though? I’m sceptical, but I wouldn’t rule it out if the global economy continues to recover. 

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

John Town has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays and 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

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

These 5 FTSE 100 shares have crashed in 2022. I’d buy one now

These five FTSE 100 shares have plunged in value over the past six months. But I believe one of these…

Read more »

man in shirt using computer and smiling while working in the office
Investing Articles

Is Scottish Mortgage Investment Trust now a bargain growth stock?

The Scottish Mortgage Investment Trust share price has plummeted nearly 50% from its 52-week high. Is this a great opportunity…

Read more »

A couple celebrating moving in to a new home
Investing Articles

2 key stock picks for reliable passive income

I’m looking at stocks that can deliver reliable passive income to complement my growth picks, and I think I’ve found…

Read more »

A Rolls-Royce employee works on an engine
Investing Articles

In penny stock territory, is the Rolls-Royce share price set to soar?

The Rolls-Royce share price has sunk recently, falling into penny stock territory. But with flying hours recovering, is it too…

Read more »

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

Lloyds shares drop 20% in 4 months. Should I buy now?

Lloyds shares have lost a fifth of their value since peaking on 17 January this year. But after rebounding from…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

As the stock market recovery stalls, should I wait to buy?

Has the stock market recovery run out of steam? If so, what does that mean for our writer's portfolio? Here…

Read more »

Diagonal chain made of zeros and ones. Cryptocurrency and mining.
Investing Articles

At 55p, is the Argo Blockchain (LON:ARB) share price too cheap to miss?

With a low P/E ratio and strong financial results, could the Bitcoin miner be good value for money?

Read more »

macro shot of computer monitor with FTSE 100 stock market data in trading application
Investing Articles

Here are 2 recession-proof FTSE stocks!

In the face of current economic uncertainty and fears of a looming recession, this Fool identifies two recession-proof FTSE stocks.

Read more »