Here’s why HSBC share price is having a meltdown in Hong Kong and London

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HSBC share price is down by more than 3.62% today, becoming the worst-performing stock in the FTSE 100. The shares are trading at 381p and is now down for two days in a row. The FTSE 100, on the other hand, is down by 0.14% while the DAX index is down by 0.30%.

US to punish Hong Kong banks

A few days ago, I wrote that HSBC share price was rallying even as its American business came under intense pressure. Since then, all has not been well. Yesterday, the shares dropped by 8 points and today, they are down by 15 points.

HSBC is not alone. Standard Chartered shares are also down by almost 2% today. At the same time, Royal Bank of Scotland (RBS) and Lloyds share price are down by just 0.20%.

More so, volume of HSBC shares has increased to more than 5.6 million, according to HL. It is only second to Lloyds and BP.

The main reason why Standard Chartered and HSBC share prices are falling is that the United States is considering the two banks. As I wrote below, the banks, together with other large businesses in Hong Kong have supported the national security law. This report was first reported by Bloomberg. In Hong Kong, HSBC shares declined by more than 4% also.

The situation is more challenging for HSBC than it is for Standard Charted. That is because, while HSBC is a British bank, it makes about two thirds of its income from Hong Kong. It is also the biggest issuer of Hong Kong dollars. In a statement, an analyst at Bloomberg said:

“Disruption to the currency peg and dollar funding, with HSBC reporting in U.S.-dollars, could erode revenue and accelerate material changes in its dual listing and structure.”

HSBC walking in a political tightrope

As I wrote on Monday, the likely reason why HSBC has been praising China is because it is expanding rapidly there. While it is shedding more than 35,000 jobs globally, the bank announced that it is adding about 100 wealth advisors in China.

The US is considering several actions to punish China and Hong Kong for the law. It could disrupt the Hong Kong currency peg to the US dollar. However, most people believe that the move would hurt HSBC and Hong Kong people, not China.

Meanwhile, HSBC share price is finding trouble because of the recent stress test in the US. The Fed identified the bank as the one to be most affected by defaults. That is because, together with Santander, it tends to lend to Americans with a low credit score.

HSBC has also been criticized by the British government. In a statement, Dominic Raab said:

“In relation to HSBC, ultimately businesses will make their own judgement calls. But let me just put it this way, we will not sacrifice the people of Hong Kong over the altar of banker bonuses.”

HSBC share price analysis

The HSBC share price is trading at 381p, which is below the Monday’s high of 409p. On the daily chart, the price is below the 50-day and 100-day exponential moving averages and a few points above the YTD low of 366p. The price is also below the descending trend line that connects the highest points on March 19, June 5, and July 3.

In the short term, as negative headlines come, the price may continue moving lower as bears attempt to test the YTD low. On the flip side, a move above Monday’s high of 409p will mean that there are more buyers in the market who will be keen to push it higher.

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HSBC stock price analysis

HSBC share price

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