Reasons for Investing in HSBC HOLDING PLC - Essay Example

Final Share Portfolio Review Reasons for investing in HSBC HOLDING PLC HSBC is one of the largest institutions dealing in financial and banking services, it is also a public limited company started in 1990. HSBC is located in the UK and has its headquarters in London. It has about 8,500 offices spread across the world with 320,000 employees and about one hundred million customers globally. It is considered the strongest institution offering financial and banking services around the world. HSBC also has an impressive international listing on various and important stock exchanges around the world with about 220,000 shareholders (Harry Wilson, 2011). It is branded world’s number 1 in the provision of various services and products to many customers. HSBC helps their customers in investigating emotional attitudes in matters related to financial markets and telling them the importance of investing in long term. They also provide share services online for those investors who are interested in their own portfolio management. HSBC have a range of investments, life insurance, and savings opportunities, which can be applied online for experts (Chandra, 2008). By 2009, this company was rated amongst the largest group of banks and the sixth largest in the world according the measure of the Forbes magazine. Hong Kong used to be its headquarters up to 1992 when there was an urgent need due to the force that was eminent by then to move to the UK as a state of completion of acquiring midland bank. Presently, there is no area in the world that dominates the earnings made by this group. Hong Kong is still HSBC’s substantial income source. The recent expansion and acquiring of HSBC roots in China have increased their customer confidence and reason to invest in them. This banking company has established itself well and widely in its operational base in the world. This company has its major points on such services as investment, lending, and provision of insurance services globally. HSBC bank as a company of the HSBC group is internationally recognized as a bank and a provider of financial services. It offers a stream of services related to finance and serves to diversify customers across the world in four groups of customers and worldwide business, namely commercial banking, financial services that are personal, private banking and global markets and banking. The group in general and the bank in particular, cater for a wide range of services such as commercial, personal, institutional and corporate, private banking and investment by clients. This company carries out its operation across the border in the UK, Asia, America, Africa, and in the Middle East. This enterprise has experienced a recent development. In December 2010, it secured 3.25 b credit facilities. In the same month, it partnered with Zorco, then in July it featured in the banking market of Kuwait, which was followed by selection of asset and leasing finance solution and lastly in March, it introduced an investment portfolio in the Middle East. Its SWOT analysis profile has a provision that is detailed and extensive in strategy analysis on the firm’s operation and business. The profile was done by Global Data to provide for clarity and unbiased perception of the firm’s key weaknesses and strengths and the possible threats and opportunities. This profile aids in the formulation strategies that enable the involved partners to understand one another, competitors, and customers better. The contents of this profile entail corporate strategy, SWOT analysis, and description of the businesses. PESTEL Analysis of HSBC HOLDING PLC The PESTEL factors are very important in giving details that a business venture should consider before exploring the investment plan. HSBC HOLDING PLC as the choice for the £10,000 investment is superior in market capitalization. Big companies like HSBC HOLDING PLC are exposed to diverse operating difficulties in political environment, the legal, or even the cultural system. The political factors that HSBC HOLDING PLC faces Among the different countries of HSBC bank, it has been receiving maximum protection through the formulation of policies and regulations by these countries. Through adhering to these policies, HSBC has been able to defend and perform its business operations effectively and successfully. HSBC also as a company has got its rules formulated to protect them against any limitations from the countries where it operates. The economic factors that HSBC faces As one of the most competitive and largest companies in the world dealing with finance and banking related services, it is said to be successful and stable economically. Despite the different challenges and obstacles they face when carrying out their activities worldwide, its management still would want to believe that they have to achieve good economic condition. This banking company has established itself well and widely in its operational base in the world. This company has its major points on such services as investment, lending, and provision of insurance services globally. HSBC bank as a company of the HSBC group is internationally recognized as a bank and a provider of financial services (Markowitz, 1959). Social factors affecting HSBC Socially HSBC is facing some challenges in its day-to-day operations. Following this HSBC is trying hard to ensure that there is fairness and equity in terms of giving out their services and resources in different societies. The company wants to achieve this by sticking on good relations and reputation in societies of their operations (Chandra, 2008). Technological factors affecting HSBC Its operations have been widely affected over the past following the emergence of the Internet and information technologies. To reach their customers globally and be aware of the latest business trends in the world, HSBC has employed various and different kinds of IT systems and use of the Internet. Share performance 1 Date Close 24-Oct-11 530 31-Oct-11 555.53 7-Nov-11 532.13 14-Nov-11 508 21-Nov-11 469 28-Nov-11 488.75 5-Dec-11 518 12-Dec-11 488.75 19-Dec-11 478.25 26-Dec-11 no stock exchange due to a bank holiday 2-Jan-12 no stock exchange due to a bank holiday 9-Jan-12 491.4 16-Jan-12 507.7 23-Jan-12 544.9 31-Jan-12 529.7 6-Feb-12 557.5 13-Feb-12 564.4 20-Feb-12 581.7 27-Feb-12 554.88 5-Mar-12 561.17 12-Mar-12 556.1 Share price of HSBC for last 6 months Source: (London South East, n.d.) Share price at HSBC for the past 1 month By analyzing share price performance from 12 March 2012, the trend has been going down, meaning that it was a good decision to sell the shares by that date. The falling values begin at 19 March 2012 with the share price standing at 575.80 pence. Following the trend of the graphs and charts above, it clearly shows that there is a fall in price of the shares. The lows have hit the mark of 555.7 as at 23 March 2012, which is about 20.10 falls in the share value. Checking out the performance of the share for the highs and lows, the opening and closing values, it is wise that when the share value shoots up, selling them is very important. Getting good returns without running the risk of being hit by a huge loss is by making sure that the opportunity is taken when the highest value per share has tremendously increased. Confirming also with the first chart shown above, the share performance is not really attractive and it is wise to buy a number of these shares in wait for the rise in the share price (Chandra, 2008). The profile of HSBC has always consisted of the rising and falling share values as indicated by the 6 months share value graph. Judging the trading history past the 12 March 2012 when the shares were sold at 556.1 pence a share, the value is still deemed to fall but with the assurance that the rise is on the way. Looking at the previous performance of shares in last months, 21 Nov 2011 recorded the lowest share price of 469.00 pence, which then shifted rapidly upwards to a high price of around 545 pence on 23 Jan 2012. This shows that even though share values can go down, there is a sign of quick recovery in the value of these shares. The shifting trends displayed by the graph show the unsteady trend in investments of shares; for this reason it is advisable for potential investors to study the financial position of any firm before taking action. More so, one should invest when a company is in a steady position to yield more dividend for each invested share. Therefore, investing in HSBC securities is highly predictable and hence, it is a right choice to invest in HSBC. Comparison Analysis On 9 Jan 2012, the price of share was 491.4 pence. This increased rapidly until it reached the highest level showing a positive return of 10.88% of the bank stocks. The bank also recorded 27.42 as standard deviation on its stocks. Therefore, there was a profitable investment when comparing the first investment through up to the last one. The price of shares has been increasing, that is, from 530 to 544.9 pence (Harry Wilson, 2011). This is why it was good to invest in HSBC and that is the reason as to why you would have stayed with them over the period (London South East, n.d.). References Chandra, P. (2008). Investment Analysis and Portfolio Management. Mcgraw Hil. London South East. (n.d.). HSBC Share Charts (HSBA). [Online]. Available from: HYPERLINK "http://www.lse.co.uk/ShareChart.asp?sharechart=HSBA" http://www.lse.co.uk/ShareChart.asp?sharechart=HSBA [Accessed: 26 March 2012]. Markowitz, H.M. (1952). Portfolio selection. The Journal of Finance. 7(1). p.77–91. Markowitz, H.M. (1952). The utility of wealth. The Journal of Political Economy. LX(2). p.151–158. Markowitz, H.M. (1959). Portfolio Selection: Efficient Diversification of Investments. 2nd ed. New York: John Wiley & Sons. Sourd, V.L. (2007). Performance Measurement for Traditional Investment – Literature Survey. EDHEC Publication. Wilson, Harry. (2011). 'No excuse at all' for owning HSBC shares. The Telegraph. 11 November. Available from: HYPERLINK "http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8885380/No-excuse-at-all-for-owning-HSBC-shares.html" http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8885380/No-excuse-at-all-for-owning-HSBC-shares.html. [Accessed: 26 March 2012]. Read More