HSBC Stock News: HSBC Stock Price Continues To Rise

HSBC analysts are joining the chorus of optimism surrounding the stock market. They believe that the current rally has room to grow - growth without overheating inflation.

Positive outlook comes despite lingering concerns about inflation. However, recent data showing slightly lower-than-expected inflation and weaker US retail sales has given investors hope for a balanced economic environment.

The Federal Reserve's response to inflation has also been a key factor. While inflation remains a concern, the Fed's shift from a very dovish stance in January to a more cautious one in April has provided stability in interest rates and inflation expectations. This stability is considered favorable for riskier assets such as stocks.

HSBC Stock Prediction: reasons why HSBC analysts are bullish

Market sentiment and positioning haven't reached levels that typically indicate an imminent market peak.
Real money investors, such as pension funds and insurance companies, are still somewhat cautious, with only a slight overweight position in equities and an underweight position in credit.
The concern that the Fed will raise interest rates too quickly has lessened.
The process of the Fed reducing its balance sheet, known as QT, is not expected to significantly impact market liquidity.
China's improving economic situation is seen as another favorable factor for the markets.
HSBC's own machine learning models are adding to the optimism, predicting an "Everything Rallies" environment for stocks.

Based on these factors, HSBC is maintaining a risk-on posture in their investment strategy. This means HSBC is favoring riskier assets with the potential for higher returns. Specifically, they are heavily overweight high-yield credit, emerging market debt, and equities in the US, emerging markets, and Japan, instead of developed market government bonds and investment-grade corporate bonds, which are seen as offering lower potential returns.

Note:HSBC recently bought back a bunch of its own shares from two stock markets. They paid up to £7.1450 (British pound) and HK$70.0500 (Hong Kong dollar) per share. This is part of a bigger program where they are spending a total of US$374.1 million to buy back their own shares. By buying and then canceling these shares, HSBC will have fewer shares outstanding, which can affect how much voting power shareholders have and the total amount of money the company needs to pay out to shareholders.

HSBC: Bulls vs Bears

Bulls

Good Dividend Payout: HSBC is expected to pay a high dividend this year (around 10.4%), which is attractive to investors seeking income from their investments.

Strong Business Growth: Excluding interest income, HSBC's business is expected to grow steadily, with a 6% annual growth rate projected from 2025 onwards. This suggests the company is finding new ways to make money.

Undervalued Stock: Analysts believe HSBC's stock price is currently lower than its true value and is expected to rise in the coming years. They've raised their target price for the stock.

Bears

Risk of Loan Defaults - concern that problems in China's real estate market could lead to more people and businesses defaulting on loans they took out from HSBC. This could hurt the bank's profits.

Short-Term Loss - HSBC is expected to lose $1 billion this year, which could weaken its financial position and scare off investors.

Selling Pressure - A major investor in HSBC plans to sell a significant portion of their shares. This could drive the stock price down as more shares become available for purchase.