HSBC has dropped nearly 15% since the collapse of SVB bank, but could it fall further?

HSBC continues to fall as the banking sector across the world feels the shockwave after the collapse of SVB & First republic bank. Fundamentally HSBC likely is okay as its the largest bank in the UK, therefore, works closely with UK regulators, the government and the bank of England. Adding the additional debt comes with some risks, however, if managed correctly over time can net the bank an additional £88m profit on the loan book value. The fundamental issue sits with the stability of other banks across the US and the world. If more banks have the same problems this will redirect deposits and wealth into other banks like HSBC or JPMorgan as well as lose faith in the banking system. While that is okay, it adds pressure to the banks taking the debt on its a mandatory takeover as opposed to a pre-vetted application. Takeovers usually take months and due diligence, but in cases of banks going into administration, this cannot be done and can be a government order and intervention.

Looking at HSBC stock itself, it could be in for a fall lower over time. There is some minor support at the 20 & 50 periods EMA (£5.52 followed by £5.27). A further breakdown below the moving averages takes the bank looking towards the trendline support at around £5. This will definitely weigh on other banks and the FTSE100 and push the index way lower potentially in line with current US index losses.

The federal reserve might be less confident in raising rates even more after the pressures it's putting on banks, however, if CPI comes in higher than expected, that might not be the case. A lower number than the forecast today would be good for the medium term. In the short term, the picture is difficult to predict as markets are very volatile at the moment, hence the VIX spike.

Towards the upside, HSBC has resistance at its swing high of £6.39. MACD is turning lower, with an RSI reading of 53, suggesting falls can be extended by a lot without presenting oversold conditions.