HSBC share price is falling in Hong Kong and London today as traders react to news that the bank is considering exiting the American market after 40 years. Shares in the company dropped by 0.60% in Hong Kong and by 1.20% in London.
In a report published on Saturday, the FT said that HSBC’s senior management will possibly recommend exiting the loss-making US retail unit. They will advocate shifting these resources to the lucrative Asian market, where the bank has a strong presence.
HSBC has had a complicated history in the US. It first attempted to take market share in retail banking about 40 years ago. However, the bank’s market share didn’t improve because of strong competition from the likes of JP Morgan and Morgan Stanley.
As a result, it was forced to focus on a niche subprime lending industry, which pushed it to $280 million losses in 2019 and $182 million in 2018. As such, it makes sense for the management to focus on areas of strong growth.
HSBC will not abandon its other US businesses. Indeed, it is seeking to grow its market share in wealth management and other trading businesses. So, is HSBC share price too cheap to ignore?
The daily chart shows that HSBC share price has bounced back in the past few weeks. It has jumped by more than 40% from its September bottom at 281.70p. The shares have recently moved above the 50-day and 200-day exponential moving averages, which is a sign that bulls have prevailed. Similarly, the Relative Strength Index (RSI) has continued to rise.
Therefore, while a pullback is possible in the near term, I suspect that the shares will continue rising, with the next level to watch being 430p.
