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Thursday, January 28, 2021

HSBC overcomes 25-year low share price up 50%

HSBC has overcome a 25-year low with share prices climbing more than 50% since September.

The bank has been under increased regulatory and economic pressure in Europe and Asia.

So it was a great result when shares rose more than 50% in Hong Kong and 48% in London.

However the bank is still down a third since the start of the year despite better than expected third quarter results.

Profits have dropped 46% overall, but in Asia HSBC “continued to perform resiliently” with pre-tax profits of $3.2bn.

Indeed last month HSBC had an 8% increase in optimism that it will resume paying dividends.

Edward Moya of trading firm Oanda said:

“Now is the time for financials to shine and it seems HSBC is at the top of many lists since they have done enough to restart their dividend,”

Hopes also tied up with the rapidly emerging covid vaccine which could see an economic turnaround.

“The top banks will all benefit from a strong global economic recovery that will boost jobs, credit card spending, and drive business lending,” according to Moya.

HSBC also stands to gain if Biden takes a softer stance on China, one of it’s biggest markets.

The pressure exerted on China by the Trump administration has made it difficult for the bank to profit this year.

HSBC overcomes 25-year low… but at a price

Currently HSBC is looking to restructure it’s global operations starting by axing 35 000 jobs.

They are pulling back from US operations according to the financial times, to focus on the more profitable Asian markets.

Chief executive Noel Quinn said the company will go “further and faster on our cost and risk-weighted asset reduction programmes.” This was despite setting $7.7bn aside for potential pandemic loan losses.

HSBC has never been the world’s most popular bank, despite being one of the biggest.

It has faced allegations of money laundering and allowed fraudsters to transfer millions of dollars through its services in 2013.

Source:

https://www.bbc.co.uk/news/business-55155826

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