Standard Chartered share price has retreated: Is it safe to buy the dip?
Standard Chartered (LON: STAN) has had a strong start of the year. The shares jumped to a high of 796p, the highest point since June 25. At its peak this year, the stock was up by more than 136% from its lowest point in 2021.
Will StanChart be acquired?
Standard Chartered is a leading global bank with operations in tens of countries around the world, mostly in the emerging markets. The firm has over $800 billion in assets and is one of the top FTSE 100 constituents.
StanChart, as the company is popularly known, has performed well in 2023 as hopes that the company will be acquired rose. The likely buyer was First Abu Dhabi Bank, a company that is seeking to diversify its income from the Middle East. First Abu Dhabi Bank is awash with cash, helped by elevated oil and gas prices.
In a statement last week, the bank said that it will not continue its pursuit of the British bank. A key concern is whether the deal will be allowed by British regulators. Still, there is a likelihood that the bank will be acquired by other entities. Rumors of its buyout have been around for years from other companies like Barclays and HSBC.
HSBC will likely not acquire the company because it is restructuring as it seeks to grow its Asian business. Standard Chartered has a growing presence in Hong Kong, where the regulators would question the tie-up. That leaves Barclays and other Middle Eastern banks who could purchase the company.
Fundamentally, Standard Chartered is doing well. The company’s profits before tax rose to $2.77 billion in the first half of the year. At the time, the company announced significant buybacks and moved out of some African countries.
Its exposure to Turkey where the lira has crashed is also a big challenge. Stanchart is also set to benefit from the rising interest rates. The next key catalyst for the stock will be this week’s bank earnings season.
Standard Chartered share price forecast
The daily chart shows that the Stanchart stock price has been in a strong bullish trend in the past few months. This rally culminated in a bullish breakout after the company’s acquisition rumours. It moved above the important resistance point at 641p, the highest point on June 29.
The shares remains above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) moved above the overbought level. Therefore, the outlook of the stock is still bullish, with the next key resistance level to watch being at 800p.
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