HSBC share price continued its strong rally and is now sitting at its all-time high, with its market capitalization hitting $300 billion. It has become the sixth biggest bank in the world after JPMorgan, Bank of America, ICBC, Agriculture Bank of China, and China Construction Bank. This article explores whether the stock has more upside to go.
Why the HSBC share price has soared
HSBC, a top European bank, has been in a strong uptrend in the past few years, moving from a low of 277p in 2021 to the current 1,277p.
This surge has mirrored the performance of other European banks like Société Générale, UniCredit, Lloyds Bank, and Commerzbank.
This rally happened because of the relatively higher interest rates, which boosted its net income margin and income.
Most importantly, the management has been implementing a turnaround strategy that has seen it exit some of its unprofitable markets with the goal of increasing its emphasis on the Asian market. As part of this growth, the company announced a major acquisition of Hang Seng Bank.
It has exited its French, Canada, the United States, Greece, South Africa, Argentina, Uruguay, and Sri Lanka.
Additionally, the company is expanding its business in other areas, including wealth management, where it is aiming to become a major competitor to other companies like UBS and Morgan Stanley.
Additionally, the company has benefited from the ongoing cost-cutting measures as it seeks to save over $1.5 billion annually.
The most recent results showed that its business did relatively well even as it incurred some restructuring costs. Its profit before tax stood at $7.3 billion, down by $1.2 billion compared with Q3’24. The decline was because of its legal provisions of $1.4 billion.
HSBC’s revenue rose by $0.8 billion to $17.8 billion, while its net interest income (NII) jumped by $1.1 billion to $8.8 billion.
Analysts believe that the company will publish strong financial results in February. The management expects that its RoTE will be in the mid-teens, with the net interest income of $43 billion. They also expect that the company will give a more robust outlook as other companies have done.
Analysts see the RoTE coming in better than expected, with the management expected to raise its RoTE outlook by as much as 200 basis points.
HSBC stock price technical analysis
The weekly chart shows that the HSBC stock price has been in a strong uptrend in the past few years, moving from a low of 277p in 2021 to the current 1,277p. Most recently, it has risen for eight consecutive weeks as demand rose.
The stock has remained above all moving averages. For example, with the stock trading at 1,277p, the 50-week moving average is at 985p, raising the possibility of a mean reversion in the coming weeks. Mean reversion happens when an asset moves back to its historical averages.
The Relative Strength Index (RSI) has continued rising and is now at the overbought level of 77. Similarly, the Percentage Price Oscillator (PPO) has continued rising this year.
Therefore, while the stock has more upside, chances are that the stock may retreat in the coming weeks and then resume the uptrend.
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