The HSBC (LSE:HSBA) share price has rocketed 52% higher in the past year. The company clearly has good momentum right now, but I see some issues ahead that could throw a spanner in the works. Here’s what I believe needs to happen in the coming year for the stock to keep pushing higher.
New leadership
Earlier this month, the bank confirmed that interim chairman Brendan Nelson will take on the job on a permanent basis. This came as a surprise to some, given that Nelson’s in his mid-seventies and was rumoured not to want to take on the role at this stage of his career. Despite HSBC searching for seven months for a candidate, it ultimately chose Nelson.
It’ll be interesting to see what changes he decides to make now that he has the role permanently. If he takes on things actively, there could be big changes afoot. However, if he’s more passive or takes a back seat, the growth stock could fall behind peers. Investors don’t like uncertainty, so they’ll want some reassurance from Nelson next year that he’s got ideas to drive the company forward.
China exposure
HSBC has significant exposure to Asian hubs such as China and Hong Kong. During good times, this can be a source of strength, but looking to next year, I think the outlook’s murky. A renewed downturn in the Chinese property market, trade restrictions with the US or concerns around economic growth could all present a headache for the share price.
It might not even be an event that materially hurts the business, but the share price could struggle as worried investors sour on what the future holds.
Lower interest rates
It shouldn’t come as a surprise to investors that interest rates in the UK, US and other key countries are going to fall in 2026. In theory, this should reduce the bank’s revenue. The net interest margin HSBC earns from lending money versus paying out on deposits should shrink.
It might be able to offset this impact through other divisions, such as wealth management and global capital markets activity. The fees and commissions made from these areas are independent of how interest rates move. If quarterly results show this is the case, the stock could rally.
A big year ahead
Ultimately, 2026 is likely to be a big year for the stock and it’s worth exploring further. The above factors don’t necessarily have to be bad news for the share price. If Nelson makes good decisions, China outperforms and interest rates don’t fall as much as we expect, the stock could easily fly higher. With a price-to-earnings ratio of 12.32, it’s far from being overvalued or expensive.
But I see the above factors as key hurdles that will be focused on next year by investors.
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