HSBC Holdings HSBC shares touched a five-year high of $49.46 during Thursday's trading session. Year to date, the stock has risen 21.5%, outperforming the industry’s jump of 7.8%.
In the same time frame, HSBC’s peer, UBS Group AG UBS, has declined 0.9%, while Barclays BCS shares have skyrocketed 70.5%.
Year-to-Date Price Performance
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Technical indicators suggest strength for HSBC. The stock is trading above its 50-day and 200-day moving averages. It signals robust upward momentum and price stability for HSBC. This underscores positive market sentiments and confidence in the company's financial health and prospects as it continues its Asia pivot strategy and simplifies global operations.
50-Day & 200-Day Moving Averages
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HSBC has been aggressively restructuring its global footprint to reduce costs and complexity. The company intends to position itself as a top bank for high-net-worth and ultra-high-net-worth clients in Asia.
In sync with this, last week, HSBC announced a deal to divest its French life insurance arm, HSBC Assurances Vie (France), to Matmut Société d’Assurance Mutuelle. Also, in September 2024, the company agreed to sell its private banking business in Germany to BNP Paribas and its South Africa business to FirstRand Bank and Absa. In April 2024, the company announced an agreement to divest its Argentina business, while in February, HSBC agreed to sell its Armenian unit. The company already exited retail banking businesses in the United States, Canada, France, New Zealand, Greece and Russia.
HSBC intends to reinvest the proceeds from the divestitures in expanding its presence in Southeast Asia and China, where the bank believes it can leverage its existing strengths to drive growth. As such, the company acquired Citigroup's retail wealth management business in China and Singapore-based SilkRoad Property Partners Group. Also, it has relaunched its private banking business in India.
HSBC is simplifying its organizational structure into four businesses (Hong Kong, UK, Corporate & Institutional Banking and International Wealth & Premier Banking), enabling it to quickly deliver on its strategic priorities. This move aims to mitigate the overlapping processes and decision-making integrated into the existing structure, leading to rapid execution. Similar steps are being taken by BCS and UBS too. Both lenders are trying to focus on core businesses to drive profitability.
Despite the uncertain macroeconomic environment, HSBC’s capital position remains robust. Given the solid capital position and lower debt-equity ratio compared with the industry, the company consistently rewards shareholders. HSBC expects a dividend payout ratio of 50% (excluding the impacts of acquisitions and disposals) for 2024. Further, it intends to initiate a share buyback of up to $3 billion, which will be completed by February 2025.
HSBC Stock Trading at a Discount
HSBC stock is currently trading at a 12-month trailing price-to-tangible book (P/TB) of 0.89X. This is below the industry’s 1.99X. This shows that the stock is inexpensive at present.
Price-to-Tangible Book Ratio (TTM)
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HSBC stock is inexpensive compared with UBS, which has a P/TB of 1.27X. On the other hand, it is trading at a premium BCS’ P/TB of 0.60X.
Is HSBC Stock Worth Betting On?
HSBC's robust capital position, business restructuring and simplifying initiatives will support its Aisa pivot strategy. Strong brand value, relatively lower rates and a global network are expected to act as tailwinds. In 2025, the company is likely to reap the benefits of its efforts to shift away from less profitable operations globally.
Given its favorable long-term prospects and lower valuation, investors might consider investing in HSBC stock now. Those who already have the stock in their portfolio can consider holding on to it for robust returns.
HSBC currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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