Are HSBC Holdings shares a good investment?

HSBC shares are up double digits in 2023 and management called for $1 billion to support climate tech startups. But can this momentum continue?

HSBC Holdings (LSE:HSBA) shares have been one of the stars of the FTSE 100 index due to its prolonged upward journey. HSBC Holdings shares, currently trading at 643p, have risen steadily since hitting a low of 283.35p in September 2020. The stock has appreciated a whopping 125% since then. And in 2023 alone, the shares have shown an increase of 20%.

Looking ahead, let’s explore whether HSBC Holdings shares are still worth buying.

Key points

• In 2023, the HSBC Holdings share has appreciated by 20% until September.
• The London-based financial company plans to invest heavily in the energy transition trend.
• I am quite optimistic about the future of HSBC Holdings shares.

What does HSBC Holdings do?

HSBC Holdings plc is a British multinational banking and financial services holding company. With more than 4,000 offices, the company operates in more than 70 countries around the world.

HSBC Holdings Plc shares, listed on the London, Hong Kong, New York and Bermuda stock exchanges, are held by around 180,000 shareholders in 126 countries. HSBC Holdings has a market capitalization of £125 billion. More than 40,000 shares of the financial services company are traded on the Stock Exchange London Stock Exchange daily.

What do the finances look like?

HSBC Holdings remains focused on continuing to improve our performance and maintaining strict cost discipline. The strong first-quarter performance provides further proof that its strategy is working.

Revenue rose 64% to $20.2 billion and pre-tax profit rose $8.7 billion to $12.9 billion. Additionally, the net interest margin was reported to be 1.69%, which increased by 50 basis points compared to the first quarter of 2022.

The company remembers its shareholders and its commitment to them. The Board approved a first interim dividend of $0.10 per share. In addition, they also plan to initiate a share buyback for up to $2 billion.

The bullish case for the HSBC Holdings share price

The London-based financier plans to invest heavily in the energy transition trend¹. HSBC plans to allocate $1 billion in funding to support climate tech startups around the world in an effort to help reduce carbon emissions. The funding is expected to support startups in electric vehicle charging, battery storage, sustainable food and agriculture, and carbon removal technologies.

They also plan to invest $100 million in Breakthrough Energy Catalyst, a separate platform that funds and invests in companies using emerging technologies to transition to cleaner energy sources.

In addition to the projects mentioned above, HSBC has also launched a new climate technology venture capital strategy, which aims to invest in early-stage companies dedicated to achieving a net zero transition.

The bearish case for the HSBC Holdings share price

Among other risks such as regulatory, operational and reputational risks, one of the new challenges facing the financial sector is “greenwashing”. In fact, HSBC Holdings recently added it to a list of risks that could affect the bank’s access to capital markets.

The bank has stated that if it is perceived to mislead stakeholders about its business activities or fails to achieve its stated net zero ambitions, it could face a risk of greenwashing, resulting in significant damage to its reputation, affecting its ability to income generation and potentially your access to capital. .

HSBC Holdings Stock Price Prediction

HSBC shares have been rising for the past three years. While this makes investors happy, analysts are both intrigued and fearful about the future of bank stocks.

Most analysts have a positive outlook and buy stance on HSBC Holdings stock. The forecast price, for the next 12 months, is set at 787.6p with a high estimate of 1,000p and a low estimate of 580p. If true, this suggests that today’s valuation may be an attractive entry point for my portfolio. But, as always, analysts’ forecasts have an element of inaccuracy. Therefore, investors should not make decisions based solely on stock price predictions.

Should you buy HSBC Holdings shares today?

Personally, I am quite optimistic about the future of HSBC Holdings shares. And I plan to add them to my portfolio once I have more capital available.

But with every stock investment, uncertainty always hangs in the air. Banking and financial businesses have a history of being cyclical. So as I plan to add this stock to my portfolio, I will keep an eye on the broader banking sector and stock market cycles.

Article sources

1. Reuters, tech-startups-2023-09-20/”>HSBC to make $1 billion in funding available to climate tech startups

Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. The opinions expressed about the companies and assets mentioned in this article are those of the author and therefore may differ from the opinions of The Money Cog Premium Services analysts.