The HSBC share price will be in focus this morning as investors focus on the Chinese housing market. The stock is trading at 385p, which is a few points below last week’s high of 394p.
HSBC has a lot of exposure in the Chinese market. Indeed, the company makes most of its money from the region. As a result, it has benefited substantially from the rebound of the country’s property market.
Now, there are signs that the industry is going through one of its biggest challenges on record. For one, Evergrande has failed to make its bond payments, leading to fears of contagion. Still, there is a likelihood that the company will not officially default since it has less than 30 days to raise funds. The company is currently in talks to sell some of its assets.
Now, there are risks that more companies are getting in trouble. For example, Fantasia Holdings, a leading homebuilder failed to pay a bond that was due on Monday. The company has halted its shares in the past month.
At the same time, ratings agencies slashed the credit rating of Fantasia Holdings and Sinic Holdings. Fitch downgraded Fantasia to CCC- from B. It said that the company’s situation could be worse than expected. CCC means that the company has a substantial credit risk with real possibility of a default.
Meanwhile, S&P Global Ratings downgraded Sinic from CCC+ to CC. This rating means thst thr company is vulnerable and dependent on favorable business, financial, and economic conditions to meet its obligations. The company will likely default on its $246 million offshore dollar denominated bond due on October 18.
These events are important for the HSBC share price because of its exposure to the Hong Kong market.
The four-hour chart shows that the HSBC share price has been under pressure in the past few days. The stock is trading at 384p, which is slightly below last week’s high of 395p. Tje shares are along the 25-day and 50-day moving averages while the MACD has made a bearish crossover pattern.
Therefore, the shares will likely remain unfer pressure as investors eye the next key support at 360p. However, a move above 395p will invalidate the bearish view.