It's a bad hashing function because strings are order-sensitive, but the hash is not; "ab" and "ba" would hash identically, and for longer strings the collisions just get worse; all of "abc", "acb", "bac", "bca", "cab", "cba" would share the same hash.
For an order-insensitive data structure (e.g. frozenset) a strategy like this isn't as bad, but it's still too easy to produce collisions by simply reducing one ordinal by one and increasing another by one, or by simplying putting a NUL character in there; frozenset({'\0', 'a'}) would hash identically to just frozenset({'a'}); typically this is countered by incorporating the length of the collection into the hash in some manner.
Secure hashes (e.g. Python uses SipHash) are the best solution; a randomized seed combined with an algorithm that conceals the seed while incorporating it into the resulting hash makes it not only harder to accidentally create collisions (which simple improvements like hashing the index as well as the ordinal would help with, to make the hash order and length sensitive), but also makes it nigh impossible for malicious data sources to intentionally cause collisions (which the simple solutions don't handle at all).
The other problem with this hash is that it's doesn't distribute the bits evenly; short strings mean only low bits are set in the hash. This means that increasing the table size is completely pointless when the strings are all relatively short; if all the strings are ASCII and 100 characters or less, the largest possible raw hash value is 12700; if you need to store a million such strings, you'll average nearly 79 collisions per bucket in the first 12,700 buckets (in practice, much more than that for common buckets; there will be humps with many more collisions in the middling values, and fewer collisions near the beginning, and almost none at the end, since stuff like '\x7f' * 100 is the only way to reach said maximum value), and no matter how many more buckets you have, they'll never be used. Technically, an open-addressing based hash table might use them, but it would be largely equivalent to separate chaining per bucket, since all indices past 12700 would only be found by the open-addressing "bounce around" algorithm; if thats badly designed, e.g. linear scanning, you might end up linearly scanning the whole table even if no entries actually collide for your particular hash (your bucket was filled by chaining, and it has to linearly scan until it finds an empty slot or the matching element).