Introduction

This report aims
to analyse HSBC’s share prices. It will be about the six months period 27 July
2016 until 31 December 2016. For this report, I have made use of Yahoo.com,
HSBC’s interim and annual reports of 2016 and CNBC’s price analysis.

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Share analysis

On July 20,
2016, the current and former head of global foreign exchange cash trading were
charged with conspiracy to defraud a client. After that moment, HSBC’s share
price reached its almost lowest point at £438.00.

 

After this,
HSBC tried to recover the share price by introducing their new strategic
objectives within the interim report. Firstly, they introduced their cost-saving
management which caused a 4% decrease in expenses. Secondly, they reduced their
risk-weighted assets, which increased their common equity ratio from 11.9% to
13.6%, within six months. This encouraged investments once again, leading to
the slow rise of HSBC’s share price.  

 

Despite fluctuations,
there was a steadily increasing trend. Then on August 3, HSBC announced their share
buy-back of $2.5 billion. This was possible due to the successful sale of the HSBC
Bank in Brazil. The announcement mentioned that it would benefit all
shareholders. It also portrayed the firmness and flexibility of HSBS’s balance
sheet. This caused for a shoot up in the share price. The trend experienced a
sudden increase of 19% within 5 days, the share
price rose from £482.20 to £537.

 

This upward trend continued for four months, until 6 December,
when there was another significant increase in the share price. Within only 2
days, the share price went from £626.70 to £679.60, a growth of almost 10%. The
upsurge was a result of HSBC maintaining their annual dividend of $0.51.

From
then on, the share price has remained somewhat constant, with a few downward fluctuations.

Future Prediction                                                                                                          HSBC’s share price on December 2016 was £656.90. The annual report of 2016 described HSBC’s significant
investments in technology, focused on increasing cost efficiency. It also
highlighted the company’s increased market share. Thus, this leads to the believe
that the share price trend will only improve more than it already has in 2017.