HSBC share price outlook as Ping An pressure mounts

on Nov 4, 2022
  • HSBC share price has made a strong bullish breakout.
  • Ping An called for HSBC to break up the company.
  • The company insists that breaking up will be costly.

HSBC (LON: HSBA) share price popped to the highest level since October 21. It was trading at 475p, which was about 9.50% above the lowest level since October 26. Still, the shares remain about 13% below the highest level this year.

HSBC and Ping An battle rages on

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HSBC is a leading global banking group with operations in a number of countries like the US and UK. It has more than $2.9 trillion in assets, making it the biggest European bank.

HSBC has been in the spotlight this year as it continues its battle with Ping An, its biggest investor. A few months ago, Ping An said that the bank should break its business into two. HSBC rebuffed the view, saying that the process will be complicated and highly expensive.

Broadly, Ping An has a point in that breaking HSBC would be a better option. It argues that HSBC’s investors will be better served if it breaks into an Asian and European bank. This is important since HSBC is a European bank that makes most of its money in Hong Kong.

In a statement on Friday, Ping An said that HSBC should split into two and then aggressively cut its costs by reducing its workforce. Michael Huang, the chair of Ping An Asset Management said that it was urgent for the bank to restructure as soon as possible. 

He pointed that HSBC had a cost-income ratio of 64.2%, which is about 13% above its peer average. It is already cutting about $5.5 billion in costs. The statement added that:

“This is the most important, urgent and absolutely needed action for HSBC to improve its business performance, reducing costs and increasing efficiency, particularly amid slowing growth in the global financial industry.”

The pressure came a week after the company published its earnings last week. It said that its pre-tax profit was $6.5 billion vs $5.5 billion a year earlier.

HSBC share price forecast

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HSBC share price

The four-hour chart shows that the HSBC stock price has made a strong recovery recently. It has moved to the 38.2% Fibonacci Retracement level. It has managed to move above the 50-day exponential moving averages while the Relative Strength Index (RSI) has moved to the overbought level.

Therefore, the HSBC share price will likely continue rising as bulls target the key resistance at 500p. A drop below the support at 460p will invalidate the bullish view.

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