The Motley Fool

What’s going on with the HSBC share price?

The building of FTSE 100 bank HSBC in Singapore
Image: HSBC

HSBC (LSE:HSBA) shares have rallied in 2022 to date. With that in mind, is the current HSBC share price tempting enough for me to add the shares to my holdings? Let’s take a closer look at what’s happening.

HSBC share price rally

As I write, shares in HSBC are trading for 505p. In 2022 to date, the shares have increased by 12% from 448p to current levels. Although still some way off the 580p pre-market crash price back in February 2020, I feel the price could edge up back towards this pre-crash level in the months ahead.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

The HSBC shares’ mini rally in the first two weeks of 2022 doesn’t really offer me an insight toward the longer term outlook. I want to delve deeper into the HSBC share price and consider whether I should buy the shares or not. 

For and against investing

FOR: Shares that are close to or below a price-to-earnings ratio of 10 are generally considered a bargain. At current levels, HSBC shares have a P/E ratio of 11, just over the benchmark and most likely due to the recent rally. HSBC shares look cheap as one of the world’s biggest banks with exposure to many markets throughout the world.

AGAINST: Financial stocks like HSBC are often considered cyclical and closely linked to the world economy. Right now, the world economy looks vulnerable and any recovery post-pandemic is on a knife edge and could go either way. One of my biggest red flags when looking to add shares to my holdings is uncertainty linked to external factors that a firm cannot control.

FOR: HSBC’s most recent trading update, a Q3 update released in October last year, gave me a snapshot at the future outlook, which is favourable. The update would have boosted the HSBC share price. HSBC said revenue expectations are improving and earnings per share levels (EPS) should surpass pre-pandemic levels. Dividend payments should be reinstated with a potential dividend yield of over 4% for the current year of 2022. I am also excited by potential further dividend growth expected in 2023 which is enticing. HSBC had a favourable dividend track record before the market crash and banking-wide dividend payment suspension came into place. I understand forecasts don’t always come to fruition, however.

AGAINST: HSBC’s huge exposure to the Asia-Pacific market is an area of concern for me personally right now. China’s real estate sector is in crisis and HSBC’s exposure to this could derail performance and investment viability too. Many large real estate developers in China are struggling to repay loans. There is a belief that this could lead to economic chaos in one of the world’s largest economies. This would be bad for HSBC and the HSBC share price in my opinion.

My verdict

HSBC shares look cheap at current levels. With the outlook ahead for performance growth and more importantly dividends to return to pre-pandemic levels, I see value in the HSBC share price. For this reason I would be willing to add HSBC shares to my portfolio at current levels.

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you'll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

Jabran Khan has no position in any 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.