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Analysis before buying or selling HSBC shares

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Information on HSBC shares
ISIN code: GB0005405286
Ticker: LON: HSBA
Index or market: LSE
 

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Elements to consider before selling or buying HSBC shares

Analysis N°1

HSBC's asset acquisitions could be strengthened by the group's strong capitalisation, which would help it to sustain its business model.

Analysis N°2

The group's presence in emerging markets is of course an essential point, with acquisitions planned in Indonesia and other target countries.

Analysis N°3

More generally, HSBC's globalisation is an element that can protect the group from financial and credit problems that affect competition and could ultimately position the brand as a trusted brand in the lending business.

Analysis N°4

Finally, HSBC could take advantage of the negative media coverage of most of its competitors to restore its brand image and make its past mistakes disappear. The group could thus decide to set up a formal corporate social responsibility program to make decisions more transparent and ethical and thus regain investor confidence.

Analysis N°5

Although HSBC is making every effort to regain the public's trust, it could still suffer from the repercussions of the behaviour of its competitors and the various scandals that are currently affecting the banking sector as a whole.

Analysis N°6

Similarly, HSBC is facing the impact of the credit crisis, which has reduced its lending capacity and caused it to lose many customers. In addition, of course, there is the housing crisis and the decline in the value of real estate, which can have a direct impact on the group's profitability.

Analysis N°7

Nor is it impossible that new scandals involving HSBC will soon come to light and further damage the group's reputation.

Analysis N°8

Finally, the HSBC group could be subject to new regulations in certain countries that could threaten its profitability.

Analysis before buying or selling HSBC shares
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General presentation of HSBC

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It is essential to know the HSBC Group and its different activities if you want to be able to make a good analysis of this value. This is why we are proposing here to discover who this company is and what are its main sources of profit.

HSBC Holdings Plc is a British company in the banking sector. More specifically, it is currently one of the world's leading banking groups.

In order to better understand HSBC's activities, they can be divided into different areas according to the share of net banking income they generate and in this way:

  • Firstly, the retail banking and wealth management activities represent more than 43.6% of the group's NBI. They include the sale of traditional and specialised banking products and services such as consumer credit, leasing, factoring, management of private and other cards, as well as asset management.
  • Next come investment banking, finance and market activities with 29.7% of NBI. These activities include financial intermediation, intervention in the interest rate, foreign exchange and commodities markets, merger and acquisition advice, equity transactions, private equity, specialised and structured financing and others.
  • Commercial banking activities generate 26.54% of net banking income.
  • Finally, private banking activities generate the remaining 0.3% of NBI.

Currently, the HSBC Group manages over USD 1,642.8 billion in deposits and USD 1,037.9 billion in loans.

In terms of the geographical distribution of HSBC's revenues, the Group generates 32.1% of its NBI in Europe, 46.9% in Asia, 11.1% in North America, 5.3% in South America and 4.6% in the Middle East and Africa.

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The major competitors of HSBC

Although HSBC is currently one of the largest banking groups in the United Kingdom and elsewhere in the world, it's not alone in its market and must face a fair amount of more or less aggressive competitors. However, it is important to know the direct opponents of the HSBC bank, which operates in the same segments and the same geographic sectors. Here are the main ones with some information about their importance and their activities or rating:

Citigroup

This Company is a banking institution based in New York which resulted from the merger between Citicorp and Travelers Group in 1998. It is also one of the largest companies in the world with assets totalling over $ 1,795.1 billion and no less than 219,000 employees worldwide. Citigroup also has 200 million customers in over 100 different countries. It has been listed on the Dow Jones Industrial Average since 1997.

JP Morgan Chase

This American financial holding company is the result of the merger of Chase Manhattan Bank and JP Morgan & Co in 2001. It's currently the largest retail bank in the United States and one of the largest in the world, with assets totalling 2,513 billion dollars and a presence in some sixty countries.

BNP Paribas

This French bank is the number one in its country in terms of its activity and profitability and is one of the 10 largest international banks. It's present in 71 countries around the world and is listed on the Euronext Paris stock market as well as on the benchmark CAC 40 stock market index.

Barclays

Finally, the British bank Barclays is also a competitor of HSBC. It's listed on the FTSE 100 of the London Stock Exchange and is one of the largest banks in the country. Barclays operates in more than 60 different countries and is one of the largest banks in the world.

The major partners of HSBC

The HSBC banking group has succeeded in developing its activities throughout the world due to the implementation of strategic partnerships with competitors and large companies that exercise activities in other sectors. To understand this more clearly here are the details of several of these partnerships.  

BNP Paribas

HSBC is notably partnered with the French bank BNP Paribas in a management project related to the French national debt.

Apple

The HSBC Group has also implemented a partnership with the American group Apple. They have signed an agreement related to the operation of a recently implemented Apple Pay system that enables the payment of purchases. Other large banks are also partnered with Apple in this project.

Europcar 

To conclude, HSBC is also partnered with Europcar in the private and professional vehicle rental sector in France and throughout Europe.

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Positive factors for HSBC shares
The factors in favour of a rise in the HSBC share price:

To take a long bullish position in HSBC's share price, you must of course be convinced of the growth potential of this security. To help you do this, here are some of the company's strengths that are consistent with a positive trend.

First, HSBC Bank is considered to be a company with attractive capital in that it has been able to withstand economic volatility, particularly during the credit crisis that affected most of its competitors. Thanks to this attractive capitalization, HSBC is more independent of government support during periods of banking crisis, which is a real asset for investors and the confidence they have in it.

Other advantages of the HSBC group include its development in emerging markets, which is stronger than that of competitors in this sector. The group thus has a head start in these promising countries.
HSBC also has the advantage of offering a diversified portfolio of financial sites and products. It is therefore less exposed to risk than other major banks.

The cost management implemented by the HSBC banking group is also an advantage to be highlighted here. Indeed, through various cost-cutting measures, HSBC has made its operations more efficient and has succeeded in improving its profitability over the long term.

Finally, it may also be recalled that the HSBC group has succeeded in recent years in improving its presence in new financial markets, which has made it possible to increase its sources of income and sometimes even to offset losses in other areas. Through this strategy, HSBC is able to maintain a certain balance in its accounts.

Negative factors for HSBC shares
The factors in favour of a drop in the HSBC share price:

While the HSBC group seems to have many strengths to face the future with confidence, it also has some weaknesses that you should also be aware of before embarking on a buying trading strategy. Here are the weak points of this company that you must take into account.

First, it is regrettable that HSBC's strategy of aligning with small businesses has significantly increased its risk exposure. This association could eventually lead to losses in terms of profits.

Many scandals and disputes have marked HSBC's recent history, which may have damaged its brand image. This was particularly the case with its involvement in the subprime market in the United States, but also in 2012 with a financial scandal at the heart of which was the British banking group. Moreover, it would seem that the group did not learn from its mistakes. More recently, HSBC has been the subject of an in-depth investigation into possible foreign exchange market manipulation. As a result, the group's reputation may not improve and investors may gradually lose confidence in the company.

Other shortcomings of this group include the fact that HSBC has recently announced numerous layoffs in an effort to reduce costs. Again, this decision was not well received by critics and favoured negative opinions from the general public and shareholders.

Finally, the last weakness of the HSBC banking group concerns its desire to expand internationally. Indeed, while this expansion strategy allows it to win new markets, it also leads to a loss of links with its local public, to which it attaches less and less importance. This could of course have a negative impact on its results in the United Kingdom.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

When can you trade HSBC Group shares?

It is possible to trade on the HSBC share price during the opening hours of the London Stock Exchange (LSE) stock market, i.e. the LSE. This stock is listed on this financial centre from Monday to Friday and from 9:00 am to 5:30 pm. However, you can also trade this stock outside these hours through an online trading platform accessible 7 days a week and 24 hours a day.

What are the different trading places where the HSBC share can be found?

The HSBC share has the particularity of being listed on different financial markets. In fact, in addition to being listed on its main market, which is the London Stock Exchange (LSE), it is also listed on the Hong Kong Stock Exchange. It is also listed on other markets, including Euronext. If you trade this security online, the London Stock Exchange price will probably be used.

Which subsidiaries are owned by HSBC?

The HSBC Group owns the following subsidiaries : Hong Kong and Shanghai banking corporation, HSBC Bank USA, HSBC Bank, HSBC Bank Armenia, HSBC Bank Canada, HSBC Bank (Chile), HSBC Bank Egypt, HSBC Bank Middle East, HSBC North America Holdings, HSBC France, HSBC Trinkaus & Co. Burkhardt, Hang Seng Bank, HSBC Bank Australia, HSBC Bank (China), HSBC Bank Malaysia, HSBC Bank , HSBC Mexico, HSBC Finance, HSBC Insurance, HSBC Bank Polska, HSBC Bank Malta, HSBC Bank, HSBC Private Bank, HSBC Bank Argentina and HSBC Bank Bermuda.

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