The Motley Fool

Why the HSBC share price rose 6% in September

Image source: Getty Images.

After underperforming the FTSE 100 in August (a 10% fall versus the index’s 5% decline), HSBC (LSE: HSBA) bounced back in September. Its share price rose 6% over the month, from 591.4p to 624.6p, which was double the Footsie’s 3% gain. Can it continue to outperform the market going forward?

Little company news

Despite the Footsie-beating performance in September, HSBC’s gains lagged those made by its four blue-chip banking peers, as well as most other stocks in the broader financial sector.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

The company released little of import on the regulatory newswire over the course of the month. In August, it had announced a share buyback programme of up to $1bn by 18 October, and the bulk of September’s notices detailed multi-transactions to this end.

External events

External, rather than company news, seems to be moving the share price at the moment. HSBC — originally Hong Kong and Shanghai Banking Corporation let’s not forget — makes most of its profit in Asia, with Hong Kong by far the biggest contributor. Of group profit of $12.4bn posted in the latest half-year, $9.8bn came from Asia, with Hong Kong being responsible for $6.4bn of it and China $1.5bn.

The demonstrations in Hong Kong that began in the spring and developed into mass protest movements in the summer are having an adverse effect on the economy. As the protests, and political responses, have unfolded, HSBC’s shares (and the shares of other companies in the region) have waxed and waned with the latest developments.

It’s been the same story with the ups and downs of the ongoing US-China trade battle. A bout of optimism about progress in mid-September saw HSBC’s share price reach its peak for the month of 630.7p. However, let’s zoom out from the minutiae of the month, and look at a broader picture and timeframe.

The big picture

After the big sell-off in global markets in the past few days, HSBC’s shares are trading at under 600p as I’m writing. This compares with a post-financial-crisis high of near to 800p less than two years ago when markets were in a more optimistic mood.

The way I see it, the key questions are: “Does the long-term story of rising wealth in Asia, and other emerging markets, remain intact?” and “Can HSBC deliver strong long-term profit and dividend growth, if managed competently?” If your answer to those questions is “yes”, then like me, you’ll see the current uncertainties and depressed share price as a great opportunity to buy into this blue-chip giant.


The stock is trading at 10.2 times forecast earnings with a prospective 6.9% dividend yield. The earnings multiple is cheap and the yield is generous by HSBC’s historical standards. I put this down to the market focusing on the aforementioned immediate matters of Hong Kong protest and US-China trade, rather than the long-term prospects of the business.

Aside from the near-term external uncertainties, HSBC currently has a bit of internal uncertainty that could also be weighing a little on sentiment. It’s searching for a new permanent chief executive following the rather abrupt departure of John Flint in August, less than 18 months after his appointment. Hopefully, it won’t be too long before the group announces its new CEO.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

G A Chester 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.

Our 6 'Best Buys Now' Shares

The renowned 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 enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.