The HSBC share price has crawled back despite the mounting challenges among big Chinese developers. The stock is trading at 440p, which is a few points above November’s low of 410p. It is about 23% above the lowest level in September.
Evergrande and Kaisa implodes
HSBC is a giant bank with a significant exposure in mainland China and Hong Kong. Indeed, the company makes more than half of its income in the region.
Therefore, the company has some exposure to the region’s property market. This week, Evergrande defaulted on its bonds for the first time.
At the same time, an official at the Peoples Bank of China (PBOC) said that the issue will be handled by the market. A market that has pushed the stocks price to a record low. Therefore, there are growing risks that the company will file for bankruptcy. It is not alone considering that other firns like Kaisa have also defaulted.
As such, the performance of the HSBC share price is because analysts expect that the stock will have minimal exposure even when the Evergrande situation worsens. On Thursday, Fitch declared that the firm had moved to restricted default. This means that the firm has formerly defaulted although it has not entered bankruptcy filings or liquidation.
The HSBC stock price is also reacting to the ongoing Omicron variant. It means that key central banks like the Bank of England (BOE) will be patient before hiking rates.
HSBC share price forecast
The daily chart shows that the HSBC share price has made some modest recovery in the past few months. At the current price, the stock is a few points below its year-to-date high. It is still slightly above the 25-day and 50-day moving average. Also, the stock has formed what looks like a cup and handle pattern.
Therefore, the shares will likely have a breakout either later this month or early next year. This could see it rise above 500p. A drop below 410p will invalidate this view.
