HSBC share price is down by more than 3%, continuing a sharp downward trend that started in January 2018. The stock is also among the worst-performing company in the FTSE 100 after Rolls-Royce, ITV, Barclays, and Melrose Industries. It is trading at 294p, which is close to its lowest level in 2009. Meanwhile, in Hong Kong, HSBC stock fell by more than 4.50% and have dropped by more than 50% this year.
HSBC shares are falling because of several reasons. First, it is because of the overall weakness of the financial sector due to low interest rates. In its decision last week, the Bank of England warned that negative rates were still in play if the economy continues to struggle.
Second, there are signs that the company’s plans for China have hit a roadblock. As we have reported before, the company is attempting to have more presence in China by hiring more wealth managers. The goal is to ensure that this business division can compete well with the likes of UBS and Credit Suisse.
According to Bloomberg, the bank could become a likely candidate for China’s unreliable entity list that will punish firms that damaging to the country’s security. Also, the fact that the firm is mostly British puts it at risk as the UK realigns with the US.
Third, HSBC stock is also falling because of a recent report by the International Consortium of Investigative Journalists (ICJ). The report alleged that the bank has continued to benefit from powerful and dangerous players. The firm has said that it is overhauling its business to ensure that it meets all international laws.
So, is HSBC now too cheap to ignore? Analysts are generally mixed about the bank although none of them has commented about the current issues. Those at Deutsche Bank are bearish, with a target of 300p. The same is true among analysts at Barclays and Credit Suisse. Still, those at Goldman Sachs are bullish and expect the stock to climb to 525p.
The daily chart below shows that HSBC share price has been in trouble for years. The shares are trading below all the short, medium, and long-term moving averages. It is also significantly lower than the purple descending tend line. The Relative Strength Index has fallen to the lowest level since April 2nd. Therefore, I suspect that the shares will continue falling as bears target the next psychological level of 270p. On the flip side, a move above the 50-day EMA at 340p will invalidate this trend.
