HSBC share price analysis as battle wing Ping An rages on

By:
on Apr 20, 2023
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  • HSBC stock price has crawled back in the past few days.
  • The battle between HSBC and Ping An continued this week.
  • HSBC argues that its business model is working as it shrinks its global presence.

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HSBC (LON: HSBA) share price drifted upwards this week as its global peers published their financial results and as the company’s fight with Ping An continued. The stock jumped to a high of 590.2p on Monday, the highest point since March 13.

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HSBC vs Ping An

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One of the biggest banking and finance news this week has been the ongoing battle between HSBC and Ping An. As you recall, HSBC, which owns 8% of HSBC, started a bitter fight to change the company raidically in 2022.

Ping An’s case is simple in that it seeks to separate the company’s European and Asian business. The argument is that this separation will give investors a choice to invest in either of the two. People interested in its Asia business, which is growing at a faster pace, will invest in that franchise.

HSBC, on the other hand, has argued that separating the company will be highly expensive and that it will lead disrupt the company’s business model. It has also argued that it is actually working to change the business internally by exiting its unprofitable countries like Canada, France, and the United States. The company said:

“This would result in a material erosion of earnings, returns, dividends and shareholder value, and a disruption to our unique global customer service proposition. Accordingly, HSBC cannot support or recommend to its shareholders the structural options that have been proposed or otherwise considered.”

It is unclear how this battle will unfold in the future. Some analysts believe that splitting the company has merits because of how the company operates. They argue that the slow-growing European franchise is diluting the Asian business.

On the other hand, some analysts believe that the company’s breakup costs will not be easy. A report by KBW estimated that the cost of breaking up the form will be $13 billion. Also, proxy advisors like Glass Lewis and ISS have recommended maintaining the company as it is.

HSBC share price forecast

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HSBA chart by TradingView

The daily chart shows that the HSBC stock price has been in a slow recovery in the past few weeks. This recovery has seen it flip the key resistance at 560p into a support. The stock has also jumped above the 25-day and 50-day moving averages. At the same time, the MACD has moved above the neutral point.

Therefore, there is a likelihood that the shares will continue rising as buyers target the key resistance point at 640p, the highest point this year. This recovery will likely happen before or after May 2, when the company will publish its financial results.

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