HSBC share price predictions: is it worth to invest in the bank’s stock in 2020?
14:24, 10 February 2020
The Hong Kong and Shanghai Banking Corporation Limited (HSBC) is one of the world’s largest banks and has grown to over 3800 offices in 65 countries. Founded in 1865 and headquartered in London, HSBC has leveraged its strategy of remaining a regional bank that facilitates functionality in the global economy to grow to over 40 million customers.
The bank operates four main business units across its global operations. These are the retail banking and wealth management division, commercial banking, global banking/markets and global private banking/corporate services.
HSBC Corporation has listings on three major stock exchanges and branch listing on the Hong Kong and Bermuda exchanges. It is listed on major exchanges under the following symbols;
- London Stock Exchange (SYMBOL: HSBA)
- New York Stock Exchange (SYMBOL: HSBC)
- Paris Euronext (SYMBOL: HSBC)
HSBC share news
HSBC has faced significant difficulties to its global operations throughout 2019 and into 2020. A major blow to the company occurred during the Hong Kong protest, when it was deemed by pro-democracy demonstrators to be collaborating with the mainland government in blocking fundraising efforts of the protesters. Hong Kong represents the vast majority of the bank’s earnings in the retail banking and wealth management business unit.
HSBC has also continued to suffer as a result of ongoing investigations into its complicity in assisting US customers in tax avoidance schemes. A settlement brought forth by the ex-head of the currencies department was recently reached in the amount of $192 million USD. This includes $60.6 million in restitution, $71.85 million forfeiture and a $59.9 million penalty.
The HSBC shares forecast is also greatly affected by the ongoing coronavirus epidemic and the impact on global trade. As a global bank the long-term performance of HSBC is intertwined with facilitating transactions and trade within the global economy. It has a particularly strong presence in China and the recent border closures and travel restrictions have created a tremendous strain on the Chinese economy. While the border closures will likely be short-lived the effects on industries such as tourism as well as negative consumer opinions in the west may be long lasting.
In the wake of multiple negative factors as well as increased currency volatility in countries such as Turkey, HSBC has resorted to closing multiple branches and laying off thousands. Rumors have begun circulating that HSBC is currently in negotiations to sell all remaining business interests in Turkey as well as in a number of other underperforming markets where it has failed to remain a key player. These cost cutting strategies have kept the company profitable in the short term but do diminish the possibility of growth in the near future.
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HSBC stock performance
Market capitalisation is the total value of all outstanding shares of a corporation. HSBC market cap is approximately $142.12 billion USD and it is considered a large cap stock. HSBC share price news currently shows the stock trading at $36.54 USD on the NYSE. This is a -6.52 per cent return year-to-date (YTD) for 2020. In terms of 52-week HSBC share news, the stock has traded on the NYSE at a high of $44.93 and a low of $35.36. As you can see the price is only slightly above the 52-week low and this represents a -19.23 per cent change from the 52 week high.
There is a general sentiment that the stock has stabilised and there are not significant losses forecast by mainstream analysts. HSBC has a very high price to earnings (P/E) ratio at 11.22. This indicates that at the current time it would take an investment of $11.22 to return $1 in earnings.
HSBC share price predictions
Other than the links to money laundering and tax avoidance, the majority of the factors that have affected HSBC negatively have also had a similar effect on global economic sentiment. This does provide some optimism for the stock as increased uncertainty and the increasing belief that 2020 will not see the same meteoric market growth as 2019 will push more investors toward income generating stocks like HSBC. The possibility of steady dividends in the face of increased market volatility should allow HSBC to avoid any further major losses.
The majority of analysts and institutional investors rate the HSBC share price forecast as neutral with a few slightly favoring a buy rating. While there is not any realistic potential for strong growth, at least in the first half of 2020, HSBC presents a viable income investment option.
With the rise in global trade uncertainty and the consensus that record gains in the market through 2019 may soon come crashing down, the consistently high dividend payouts offered by HSBC (averaging 5.47 per cent annually) are attractive to investors looking to reduce their risk and ride out the oncoming volatility expected by many.
This strategy is evident as large institutional investors have increased their positions recently, signaling that while HSBC share price predictions may not forecast growth, they do think that the bottom has been reached and they do expect stability.
HSBC is scheduled to release their annual financial results on February 18, 2020 and this will be a critical factor in the near-term performance of the stock. In terms of HSBC share price predictions for further in 2020 the continued unrest and global economic uncertainty seem likely to continue. While this continued volatility will not increase the growth potential of HSBC it will push investors toward safe haven alternatives and income generating stocks which should fare well for HSBC.
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