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.
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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.
