In a year when bank stocks had a horrible time, the HSBC Holdings (LSE: HSBA) share price climbed 23%, wiping the floor with Lloyds Banking Group and Barclays.
Over five years, they’re a lot closer, with HSBC in second place, just behind Barclays.
HSBC operates mostly in China and the Far East. So it’s not as bothered by UK inflation and interest rates. And it’s those that hit the UK’s other high street banks so badly in the past two years.
Prior to that, the Chinese slowdown had hurt the HSBC share price. And the economic pain the region suffered in the pandemic meant the stock didn’t recover like most of the sector.
Nice timing if you can do it
Someone clever enough to buy Barclays in 2020, then switch to HSBC in early 2022, could have come out well ahead.
But I don’t have the ability to time things like that. In fact, history shows that very few people do. It doesn’t stop newcomers to the stock market having a go though.
In fact, people often ask me for get-rich-quick share tips. And they frown when I suggest they feed cash into a diversified set of income stocks and keep it going for a few decades. Oh well.
A top buy for 2024?
Anyway, back to HSBC. It does look like the varying fortunes of the UK and Chinese economies are behind the differing 2022 and 2023 share price moves.
But, far more important, what might the future bring for HSBC shares? And should we buy? Well, the next couple of years could hold a fair bit of uncertainty, as we don’t know where China’s going.
But I do think HSBC could be one of the FTSE 100‘s best income stocks to consider buying right now, for those with a long-term view.
Low valuation
Despite its outperformance in 2023, HSBC is still on a very similar valuation to the other Footsie banks. We’re looking at a forward price-to-earnings (P/E) ratio of under six, with a 6.8% dividend yield on the cards for 2023.
That’s a cracking forecast, and we won’t have long to wait for the results. They should be out on 21 February. And if they’re as good as I hope, I think we might see another share price boost.
But what about that risk? Heading into 2024, which country is showing the brightest lights of recovery and new growth, China or the UK?
UK vs China
I don’t know a lot about China’s economics. But it does sound to me like the country is still in the early days of what could be a long haul.
But here in the UK, inflation is falling quite quickly. And even if we haven’t seen any Bank of England interest rate cuts yet, mortgage lenders are already dropping their rates.
So what would I do? I already hold UK-based bank shares, but I’m thinking that adding some HSBC might help balance the two distinct risks.
The post Here’s why the HSBC share price rose 23% in 2023 appeared first on The Motley Fool UK.
Should you invest £1,000 in HSBC right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if HSBC made the list?
See the 6 stocks
setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#FFFFFF”, ‘color’, ‘#FFFFFF’);
})()
More reading
Best British dividend stocks to consider buying in January
I could generate an extra £300 a month by buying 8,223 shares of this dividend stock
10.3% dividend yield! I’d buy 20 shares of this FTSE 100 stock a week to target £2,000 in passive income
I’m planning to snap up cheap shares and hold them for decades
I’m eyeing these two cheap dividend shares for 2024!
HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Alan Oscroft has positions in Lloyds Banking Group Plc. The Motley Fool UK has recommended Barclays Plc, HSBC Holdings, and Lloyds Banking Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
