HSBC share price has been on a strong uptrend recently. In the past month, HSBC’s stock in Hong Kong has surged by more than 20% while in the UK, it has risen by more than 20%. In the past week alone, the shares have added more than 11%.
A key reason why HSBC shares have been rising is the recent election in the United States where Joe Biden emerged victorious. While the results are being challenged by the incumbent, most analysts believe that the results will stand as they are.
As such, analysts believe that the new president will be good for HSBC, which is the biggest bank in Europe. That is because, in recent months, the bank has been caught in the ugly trade conflict between the United States and China.
Mid this year, the bank received ire from the UK and the US after it endorsed the national security law in Hong Kong. At some point, the US administration was said to be about to sanction it together with Hong Kong.
At the same time, reports suggested that the bank was in an entity list that was drafted by China. If that was the case, it would have led to serious disruptions for a bank that is expanding its wealth management business in China. HSBC share price also fell after a report showed that it was involved in funding of illegal activities..
While analysts believe that Biden will be tough on China, they expect him to tone down the rhetoric. For example, he has said that he will do away with some of the tariffs Trump placed on Chinese goods.
While that will not directly affect HSBC’s financial performance, it will boost sentiment on the stock.
HSBC share price has also jumped because of its recent earnings that beat the consensus estimates. In total, the bank said that its profit before tax was $3.07 billion, which was better than estimates. The figure was still 36% below the $4.84 billion it made in the same year in 2019. Its revenue fell by 11% to $11.93 billion.
In its earnings statement, the bank said that it would start paying dividends once the Bank of England allowed.
Most importantly, unlike other UK banks like Lloyds and NatWest, HSBC has a strong presence in Asia. This is important because its Asian business is doing well as parts of the UK remain in lockdown.
On the daily chart, we see that HSBC share price has bounced back from the YTD low of 281.65. The price has risen by more than 37% from this low. Most importantly, the price has moved above the 50-day and 100-day moving average.
It is now a few points below the 200-day SMA, which I expect to be passed soon. That is evidence that bulls have returned, which will see it continue rallying. I estimate that the next target for the shares will be at the 200-day EMA level at 400p.
However, a drop below the 50-day and 100-day SMAs at ~350p will send a signal that there are more sellers in the market.
