The Motley Fool

Are HSBC shares worth buying?

Image source: Getty Images.

It’s recently been widely reported that shares in HSBC (LSE: HSBA) have hit the lowest price in a quarter of a century. That’s incredible when you consider that timeframe includes the global financial crash of 2008, which was a credit crisis.

HSBC shares hit by the pandemic

The shares of UK-listed banks have been hit very hard so far this year. HSBC is not alone in this. Investors fear a rise in bad loans as economic conditions worsen. This, in turn, is reducing demand for banking shares.

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...

Given the increase in local lockdowns in the UK and globally, the pandemic is going to continue being the source of economic problems in the immediate future.

Central banks can ease the pressure by pumping money into the economy and governments can introduce measures like furlough schemes. At the end of the day though, bank share prices are still sliding, so this isn’t providing much respite for shareholders. All this has hit HSBC shares. 

HSBC’s specific problems

On top of these general economic and industry problems, HSBC has to contend with being more squarely caught in the crossfire between the US and China. It’s a British- and Hong Kong-listed bank with a US presence and makes 90% of its profits in Asia.

Even though it has publicly supported China recently as regards Hong Kong, the threat still seems to loom over HSBC that it will be blacklisted by the Chinese authorities. This is because of its perceived help in having the Chinese Huawei executive, Meng Wanzhou, arrested.

All in all, even though HSBC shares have got much cheaper this year, I’d still stay well clear of them. I think there are many easier and less risky ways to make money from shares in the current market.

A better alternative, even if it is a bank

Indeed, Barclays (LSE: BARC) may be a better investment. Of course, its share price has fallen this year as well. It’s now on a trailing P/E of seven. There’s also pressure on CEO Jes Staley from an activist investor.

Putting that aside, from an investment perspective, Barclays has more appeal. It’s focusing more on investment banking, which has given it earnings a level of diversification. This diversification is something that Lloyds hasn’t got and it has suffered as a result.

Barclays, like other banks, could also receive a share price boost when they’re allowed to start paying dividends again. I think Barclays, which is in better shape, will be able to pay a more sustainable dividend than HSBC. That’s why I prefer the look of the shares.

The bank is well capitalised and I expect it to pull through this crisis. As a result, I fully anticipate it will deliver for shareholders in the coming years.

Banks won't be everyone's cup of tea so this recommendation below may be better for helping you build wealth.

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 daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Andy Ross owns shares in HSBC Holdings and Lloyds Banking Group. The Motley Fool UK has recommended Barclays, HSBC Holdings, and Lloyds Banking Group. 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.