Speculation on the asset prices of major international banking groups is becoming increasingly popular with investors who thereby profit from a high volatility
and significant movements. Although some have these shares in their portfolios others prefer to speculate on these assets by using derived financial instruments that enable them to trade on the rise and on the fall of the share price, such as CFDs.
General presentation of HSBC:
The HSBC Company as we know it is actually named HSBC Holdings PLC, and it is under this name that you will find its assets on the financial markets. The abbreviation HSBC represents ‘Hong Kong & Shanghai Banking Corporation’. The HSBC is currently one of the leading global banks and the sixth company worldwide.
One of the peculiarities of this company is that it has two headquarters, the social headquarter in London, and the main headquarter situated in Hong Kong. But most of its workforce is located in Hong Kong.
Let’s notice that the HSBC is mostly owned by Banking Corporation Limited, a bank stablished in 1865, by Thomas Sutherland, a Scottish, who is also the main founder of the group, to finance trade in the Far East, Hong Kong and Shanghai.
HSBC activities are divided as follows:
The banking group HSBC has developed its business all around the world, including in France where this company is very popular. On the French territory, it owns all the banks of the CCF group which the company bought in 2000 and which are now called UBP, Hervet Bank, Bank of Savoie, Bank Dupuy de Parseval and CCSO, Picardie Bank, Marze Bank, Pelletier Bank, Baecque-Beau Bank. Some of these subsidiaries have recently associated to be grouped under the name of “HSBC France”.
The peculiarity of this group is that they offer services to wealthier clients and to large enterprises.
Of course, HSBC has also bought several banks around the world, in Canada, the United States, Peru, Switzerland and Algeria.
The major competitors of HSBC:
HSBC is a British banking group that is one of the largest banking companies worldwide. In this position it faces strong competition from certain large companies in this sector that also influence the international markets. To enable you to better monitor this sector and understand the position held by HSBC shares here are details of the major competitors of this group:
- Citygroup which is highly present in China and the United States.
- J P Morgan Chase which exercises its activities mainly in the United States.
- BNP Paribas, a French Bank with a strong position in Europe.
- Santander, also highly present in Europe.
- Barclays which holds position number two in the United Kingdom just after HSBC.
By monitoring the current events of these banks you will be in a position to better understand the growth possibilities of the HSBC bank and the movements in its share price on the stock markets and therefore take strategic positions on the markets taking their competitors into consideration.
The major partners of HSBC:
The HSBC banking group has succeeded in developing its activities throughout the world due to the implementation of strategic partnerships with competitors and large companies that exercise activities in other sectors. To understand this more clearly here are the details of several of these partnerships.
HSBC is notably partnered with the French bank BNP Paribas in a management project related to the French national debt.
The HSBC Group has also implemented a partnership with the American group Apple. They have signed an agreement related to the operation of a recently implemented Apple Pay system that enables the payment of purchases. Other large banks are also partnered with Apple in this project.
To conclude, HSBC is also partnered with Europcar in the private and professional vehicle rental sector in France and throughout Europe.
Introduction and quotations of the HSBC shares:
Although quoted on the British and European stock markets for a number of years now, it was in 2010 that the HSBC group was introduced onto the Shanghai market.
Historically, it should be noted that the share prices of this company, similar to those of other banking groups quoted on the stock markets, have been subject to strong variations, both rising and falling, depending on the economical climate. Consequently, after attaining its highest rate of €14.8 in 2001, HSBC shares experienced a strong crisis leading them to fall to €8.4 in 2003 before recovering to €13.4 in 2006. Then came a new and longer period of decline which brought the share price down to its lowest historical rate of €3.7 in 2009.
Since this time, the price has followed various major rising and falling fluctuations but with an overall positive trend.
Important stock market information about HSBC shares:
To conclude let us look at more general stock market information on HSBC Group shares. It is in fact important to know these details before launching into speculation on this asset.
- The total stock market capital of HSBC is currently around €150,596.03 million.
- 20,052,734,043 HSBC shares are currently in circulation on the stock markets.
- The HSBC share price is quoted in section A of the Euronext Paris stock exchange in France.
- The HSBC Company share price is included in the French National stock market index, the CAC 40 and is therefore one of the 25 top French companies in terms of stock market capital.
- The major proportion of its shareholding is private but it should be noted that 5.89% is held by BlackRock and 2.18% by J. P. Morgan Chase & Co.
With all this information you will be able to implement an effective trading strategy with HSBC shares.
Breakdown of the activities and turnover of the HSBC Group:
To be able to fully understand which events can influence the HSBC share price and thereby better anticipate the possible variations it is essential to know more about the distribution of the company’s activities and turnover.
The HSBC Group is one of the international leaders of the banking sector but its activities can be classified according to their importance into different sectors as follows:
- Retail banking represents over 50.3% of the group’s activities.
- 28% of the company’s activities are in the commercial banking sector.
- HSBC’s activities in investment banking, finance and stock markets represents around 18.6% of the total.
- Finally, part of its activities, around 3.1% is represented by private banking activities.
From a strictly financial point of view it should be noted that the HSBC Group manages over 1,000 billion Euros of deposits and nearly 800 billion Euros in credit.
Understanding the geographical spread of the turnover achieved by the HSBC Group is also important to complete an effective fundamental analysis. This is as follows:
- Over 30% of its turnover is achieved in Europe.
- South America is in second position of this classification with 17.4% of the turnover.
- After which is placed North America with 16.2% of the turnover.
- Then it is Hong Kong where HSBC achieves 15.3% of its turnover.
- Finally, 4.1% of the company’s turnover comes from the Middle East.
The advantages and strengths of HSBC shares as a stock market asset:
To take a long bullish position in HSBC's share price, you must of course be convinced of the growth potential of this security. To help you do this, here are some of the company's strengths that are consistent with a positive trend.
First, HSBC Bank is considered to be a company with attractive capital in that it has been able to withstand economic volatility, particularly during the credit crisis that affected most of its competitors. Thanks to this attractive capitalization, HSBC is more independent of government support during periods of banking crisis, which is a real asset for investors and the confidence they have in it.
Other advantages of the HSBC group include its development in emerging markets, which is stronger than that of competitors in this sector. The group thus has a head start in these promising countries.
HSBC also has the advantage of offering a diversified portfolio of financial sites and products. It is therefore less exposed to risk than other major banks.
The cost management implemented by the HSBC banking group is also an advantage to be highlighted here. Indeed, through various cost-cutting measures, HSBC has made its operations more efficient and has succeeded in improving its profitability over the long term.
Finally, it may also be recalled that the HSBC group has succeeded in recent years in improving its presence in new financial markets, which has made it possible to increase its sources of income and sometimes even to offset losses in other areas. Through this strategy, HSBC is able to maintain a certain balance in its accounts.
The disadvantages and weaknesses of the HSBC share as a stock market asset:
While the HSBC group seems to have many strengths to face the future with confidence, it also has some weaknesses that you should also be aware of before embarking on a buying trading strategy. Here are the weak points of this company that you must take into account.
First, it is regrettable that HSBC's strategy of aligning with small businesses has significantly increased its risk exposure. This association could eventually lead to losses in terms of profits.
Many scandals and disputes have marked HSBC's recent history, which may have damaged its brand image. This was particularly the case with its involvement in the subprime market in the United States, but also in 2012 with a financial scandal at the heart of which was the British banking group. Moreover, it would seem that the group did not learn from its mistakes. More recently, HSBC has been the subject of an in-depth investigation into possible foreign exchange market manipulation. As a result, the group's reputation may not improve and investors may gradually lose confidence in the company.
Other shortcomings of this group include the fact that HSBC has recently announced numerous layoffs in an effort to reduce costs. Again, this decision was not well received by critics and favoured negative opinions from the general public and shareholders.
Finally, the last weakness of the HSBC banking group concerns its desire to expand internationally. Indeed, while this expansion strategy allows it to win new markets, it also leads to a loss of links with its local public, to which it attaches less and less importance. This could of course have a negative impact on its results in the United Kingdom.