HSBC Share Price Still at Risk as China Home Prices Crash

The HSBC share price has jumped in the past eight consecutive days as investors watch the happenings in China and the upcoming earnings season. The stock jumped to a high of 430p, which is about 30% above the lowest level in September.

HSBC and China

HSBC is a leading bank with more than $2.8 trillion of assets, making it the biggest bank in Europe. Unlike banks like Lloyds and NatWest, the company generates most of its income from the Asian markets like Hong Kong and Southeast Asia. 

Therefore, the stock declined sharply in September as investors refocused on the Evergrande crisis. The company struggled paying its bonds last month, pushing its stock to a multi-year low. The “default” was followed by other smaller ones by companies like Fantasia Holdings. 

As such, the HSBC share price tumbled since investors were afraid about the company’s exposure to Evergrande and other Chinese developers. It also has exposure to other participants in China’s housing market like contractors and homebuyers.

Sadly, the situation has worsened as home prices tumbled in September, which is usually one of the best months for property developers. Many developers like Country Garden, Sunac, and China Vanke have reported sales that were down by more than 20%. This trend could continue as many Chinese people fear about the sector. As a result, this trend could have an impact on HSBC and other banks.

At the same time, HSBC could also be involved in a major review that was recently ordered by President Xi Jinping. The review focuses mostly on state-owned banks (SOBs) but other large players like HSBC could also come into focus.

The HSBC share price will also react to the latest bank earnings season by the likes of Morgan Stanley, JP Morgan, and Citigroup.

HSBC share price forecast

The daily chart shows that the HSBC share price has made a strong rebound in the past few weeks. Along the way, the stock has moved above the descending trendline shown in blue. The stock has also jumped above the 25-day and 50-day moving averages while the MACD has continued the upward trend. 

Therefore, the HSBC stock will likely keep rising as bulls target the key resistance at 450p. However, the stock is also facing some substantial risks ahead.

hsbc share price