HSBC Global Private Banking (HSBC GPB) anticipates a buoyant global economic cycle and a broadening of earnings growth, supported by central bank rate cuts in the second half of 2024. As such, HSBC GPB is adopting a risk-on investment strategy, focusing heavily on quality bonds and global equities with a zero allocation to cash. The firm is particularly bullish on US markets, maintaining a significant overweight on US Treasuries and global investment-grade bonds, and holds a positive outlook on the US dollar due to its high real yield and safe-haven status amidst geopolitical uncertainties.
Cheuk Wan Fan, Chief Investment Officer in Asia for HSBC Global Private Banking and Wealth, expressed confidence in the investment climate, stating, “We have seen both the peak in bond yields and the trough of the global economic cycle.” Fan anticipates robust portfolio performance driven by appealing bond yields and an expansion in earnings growth across various regions.
HSBC GPB predicts the Federal Reserve will initiate a series of rate cuts starting in September 2025, projecting a total reduction of 75 basis points by the end of 2025. This financial environment presents a minimal incentive to hold cash, encouraging investors to capitalize on current high bond yields.
In addition to traditional financial instruments, HSBC GPB advises broadening investments across different geographies and sectors, particularly focusing on private assets and infrastructure investments to leverage long-term growth opportunities presented by digitalization and decarbonization trends.
The firm’s investment strategy is also inclusive of private markets, which have historically shown strong performance. The diversification into Asian markets is particularly emphasized, with a strategic overweight on equities in Japan, India, and South Korea due to their dynamic economic growth and structural themes.
James Cheo, Chief Investment Officer for Southeast Asia and India, noted a sideways trend in China’s GDP growth for the latter half of the year. He underscored the attractiveness of the Hang Seng Index and recommended selective investment in high-quality, undervalued stocks in China and Hong Kong.
Furthermore, the strategy includes a focused approach on emerging markets like Thailand, where the economic outlook is expected to improve in the latter half of 2024, although the market remains slightly underweight.
HSBC GPB identifies four key investment themes for the region, emphasizing corporate governance reforms in Asia, supply chain reconfiguration, and the rise of India and ASEAN as central to capturing growth and income opportunities in the new global economic order.
This comprehensive strategy reflects HSBC GPB’s commitment to leveraging global economic trends and central bank policies to optimize investment returns, positioning its clients to take advantage of a diverse range of global financial opportunities.
