With $15K to spend, which would you rather buy: HSBC stocks or Bitcoin? In Hong Kong’s stock market, an old folk wisdom is “Christmas bells are ringing for HSBC”, i.e. buying HSBC stocks over the Christmas season. But in today’s fast-evolving market, where we witness the significant change brought by disruptive innovation like FinTech, digital assets, and cryptocurrencies like Bitcoin, does that conventional wisdom still hold?
HSBC (0005) has enjoyed unwavering loyalty among Hong Kong’s retail investors for decades. In the past, the popular investment wisdom was to buy HSBC in December, hold until the end of the month, or early January next year, to enjoy a rally in its share price.
Christmas Bells Ringing For HSBC?
But as we know, 2020 has been rough for HSBC. Shares of the bank have continued to tumble, at one point in September, it traded below the 2009 rights issue subscription price at $28! As the year is coming to an end, HSBC’s share price had risen from its September lows to around $39. And here comes the question: With a $150,000 investment to make, which would you rather buy: 1 lot of HSBC shares, or 1 Bitcoin?
Bitcoin, the largest and most popular crypto asset on the market, arose just after the 2008 financial crisis, as an alternative to banks. It is an artificially scarce, cryptographically secure way to bypass traditional finance.
As a new form of currency called “cryptocurrency”, Bitcoin is not backed by any government and has the capability as a store of value. It uses blockchain technology which acts as a public ledger to confirm and validate transactions. Above all Bitcoin is finite, only a limited amount can be mined and will ever be in existence. Therefore, Bitcoin has properties that make it comparable to gold.
HSBC vs Bitcoin
In 2020, the virus pandemic has walloped the global economy and financial markets. But the year was special for Bitcoin. In December, Bitcoin soared past US$20,000 to reach fresh all-time highs! Bitcoin’s price has surged for more than 400% this year, from a low point of around US$3,800 in March, making it one of the best performing assets in the year.
2020 is also the year when Bitcoin went institutional. Investment firms and technology companies such as PayPal, Square, and many more others, are building up their Bitcoin stash. Bitcoin’s institutional-led rally has been fueled with the growing interest towards Bitcoin as a hedge against inflation. Investors of all types are looking at Bitcoin as a better store of value than the traditional safe-haven asset, gold.
In a simple calculation on ROI, if you sold 1 lot of HSBC shares at $28 in September, investing the proceeds (~$11,000) in Bitcoins, what you would get today is $25,000 – A 120% Return!
What do you want: HSBC stocks or 1 BTC? Choice is yours, choose wisely!
The above content is for general informational purposes only. It is not investment advice and does not constitute any offer or solicitation to offer or recommendation of any investment product. You should carefully consider your own individual needs, investment objectives and specific financial circumstances.