The HSBC share price is firing on all cylinders and is hovering at its all-time high as the company’s turnaround measures continue. It has risen in the last five consecutive weeks and moved to a record high of 755p.
HSBC turnaround continues
HSBC, the biggest European bank, has been in a prolonged turnaround approach as the management aims to boost profitability and boost efficiency.
The most important measures in this period has been its decision to exit key markets that were less profitable. Its goal has been to solidify its presence in Asia and in Europe.
It exited the US market by selling its business to Citizen Bank. It did that by selling 90 branches and retaining the rest in a bid to target wealthy clients.
The company then sold its Canadian business to RBC and its French business to Credit Commercial de France. Most recently, the company exited its South African and Argentinian businesses. It also sold its German private banking business to BNP Paribas. There are rising odds that it will continue exiting other countries.
At the same time, the company has made several acquisitions to boost its market share in the remaining locations. For example, it recently acquired Citigroup’s Chinese retail wealth business. It also bought UK’s branch of Silicon Valley Bank as the company collapsed.
The management has done more actions to boost its efficiency. It recently announced a strategic decision to comhine its commercial and investment banking divisions as part of Georges Elhedery’s push to eliminate overlapping roles and lower expenses.
In a report on Thursday, Bloomberg said that it is aiming to cut at least $3 billion in costs during the ongoing restructuring. These huge sums represent about 10% of its operating expenses
Read more: HSBC share price yields 7% and has numerous catalysts ahead
Results are paying off
HSBC’s actions come at a difficult time for the company. For one, China, a country it is seeking to gain market share in, is slowing and struggling to hit its 5% growth target. As a result, officials have unveiled a $1.4 trillion stimulus package aimed at stabilizing local administrations.
The reality, however, is that China’s key sectors like in real estate and the stock market are struggling, which is affecting its potential wealthy clients. It was also forced to book losses as customers default.
The most recent financial results showed that its profit before tax rose to $8.5 billion in the third quarter, a $0.8 billion rise. This growth was mostly because of its weath and personal banking division. Profit after tax rose to $6.7 billion and the company announced a $3 billion buyback.
HSBC’s revenue rose by 5% to $17 billion, even as the net interest income (NII) dropped by $1.6 billion. NII will likely continue falling as interest rates in key countries drop.
HSBC share price analysis
HSBC chart by TradingView
The weekly chart shows that the HSBC stock price has been in a strong uptrend in the past few years. It rose from the pandemic low of 220p to 755p today. This rally has mirrored that of other top European banks like Unicredit and UBS.
HSBC has formed an ascending channel, and is now a few points below its upper side. Also, it has remained above the 50-week and 25-week Exponential Moving Averages, while oscillators like the Relative Strength Index (RSI) and the MACD have continued rising.
Therefore, using trend-following principles, the path of the least resistance for the stock is bullish. The next point to watch will be at 800p, which is the upper side of the ascending channel. The alternative scenario is where it retreats and retests the lower side of the rising channel.
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