HSBC Share Price Set to Soar in London After Strong Q3 Earnings
HSBC share price is rising in Hong Kong as investors react to the strong third-quarter earnings. The bounce is an early indication that the shares will rise in London when the market reopens. The shares are up by 1.86%, becoming the third-best performing company in the Hang Seng.
HSBC shares rise after strong earnings
HSBC has been an embattled company in recent months. In addition to low interest rates, the company has been caught in the crosshairs of the conflict between the US and China.
In the UK and US, officials have accused the bank of siding with the Chinese government on the Hong Kong security law. In China, the bank is said to be in an entity list.
All this has seen HSBC share price tank. This year, they have dropped by more than 48%, becoming among the worst-performers in both Hong Kong and London. The shares have also dropped from a high of 797p in 2018 to the current level of 319p.
Nonetheless, the bank’s shares are set to rise in London today as traders react to the company’s third-quarter earnings. The company reported a 36% increase in pre-tax profit to more than $3.1 billion. That was significantly higher than the $2.01 billion that analysts were expecting. It was also below the $4.84 billion it generated in the same quarter a year ago. The bank also said that it expects its non-performing loans to be at the lower end of the $8 billion and $13 billion range it had set a few months ago.
In Asia, HSBC business generated a net profit before tax of more than $3.2 billion. In the first nine months of the year, the bank’s revenue dropped to $38.6 billion from the previous $42.7 billion.
HSBC is not the only bank to report strong earnings. Indeed, in the United States, most of its peers, including JP Morgan, Citigroup, and Goldman Sachs reported excellent results. Similarly, in Europe, banks like UBS and Barclays also reported strong earnings, mostly because of lower provisions and trading income. Their strong performance has helped push the HSBC share price up by more than 5% in the past five days.
Later today, we expect that analysts will deliver their outlook for the company. Before that, analysts at UBS had a forecast of 310p, which is below yesterday’s close. The most optimistic analysts are from Goldman Sachs, who expect the shares to jump to 525p.
HSBC stock price outlook
The daily chart below shows that HSBC share price has bounced back after it bottomed to a low of 281p. Yesterday, it ended the day at 310p and there is a possibility that it will open at about 325p. If it does that, the price will have crossed the 15-day and 25-day exponential moving averages and reached the highest level since September 8. Also, the Relative Strength Index (RSI) has jumped to the highest level since February this year.
Therefore, I suspect that the price will continue rising, with the near-term target of 350p. However, a decline below 300p will invalidate this prediction because it will send a signal that there are still sellers in the market.