HSBC share price sits at key support ahead of earnings. Is it a buy?

  • July 29, 2022

The HSBC (LON: HSBA) share price has been under pressure as investors wait for the upcoming results. The stock is trading at 515p, which is bout 7.7% below the highest level this month. It has fallen by almost 10% from the highest point this year, meaning that it has moved to a correction. Still, HSBC has done better than other banks like Lloyds, Barclays, and NatWest.

HSBC earnings ahead

HSBC is a leading global banking bank that has over $2.9 trillion, making it the eighth biggest bank in the world. It is a company with operations in key places like the UK, Hong Kong, Mainland China, and the United States.

HSBC has been in a transition in the past few years as it continues to increase its focus on the Chinese market. Indeed, it has moved its main leaders to Hong Kong from London. At the same time, it has exited many loss-making countries, including France and the United States. 

Most importantly, HSBC has shifted its focus to its wealth management division. It hopes to compete with other giant wealth managers in China like UBS and Credit Suisse. 

The HSBC share price will next react to the upcoming earnings, which are scheduled for Monday next week. In the first quarter, the company’s quarterly results dropped to about $12.5 billion. Its CET1 ratio dropped to 14.1% but remained above the recommended level of 12%.

Analysts believe that HSBC will have a good report, supported by higher interest rates but offset by the slowdown in China. In a statement on Friday, Standard Chartered, which also operates in the UK and Hong Kong said that its underlying pretax profit rose by 7% to $1.32 billion in Q2. 

It also announced a $500 million share buyback and a plan to return $5 billion to shareholders. Therefore there is a likelihood that HSBC will do the same.

HSBC share price forecast

The daily chart shows that the HSBC share price has been in a downward trend in the past few weeks. It has formed an ascending trendline that is shown in red. Indeed, the price is currently at the lower side of this channel. The stock has also moved slightly below the 25-day and 50-day moving averages.

Therefore, at this stage, the outlook for the HSBC stock price is neutral. A move below the lower side of the channel will signal that sellers have prevailed, which will see it move below 500p. The alternative scenario is where it bounces back and retests the upper side of the channel at around 560p.

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