HSBC Global Private Banking is advising high-net-worth and ultra-high net worth clients to consider taking on more risk and put their cash to work as the investment environment has become more attractive.
HSBC Global Private Banking‘s Q2 2024 investment outlook, A Fertile Ground for Investment Returns, shows that with the debate in the US shifting away from recession risks towards a soft landing, and potentially no landing, we have zero cash in our tactical asset allocation and have been talking an overweight position in both global equities and bonds.
The outlook also shows that there are many opportunities to put cash to work, although we remain selective and continue to focus on quality stocks and bonds over cheap valuations. Our four investment priorities are:
- Extending bond duration ahead of policy easing: As we approach the first Fed rate cut, which we expect to happen in June, we recommend Iocking in attractive bond yields and extend
- Broadening US equity exposure to benefit from soft landing: The US economy has been beating expectations for 15 months and continues to surprise on the upside, and we expect the US equity rally to broaden beyond technology stocks to companies in additional
- Hedging tail risks via alternatives, multi-asset and volatility strategies: Volatility is bound to remain in our complex world, so we recommend alternatives and multi-asset strategies to broaden the opportunity set while achieving appropriate diversification.
- Diversifying Asian equity exposure: In Asia, we continue to actively diversify as we await stimulus measures in China to translate into stronger growth, so we look towards India, Indonesia, South Korea and Japan for better
Willem Sets, Global Chief Investment Officer, Global Private Banking and Wealth, HSBC, said: “We think our investment priorities find the right balance between exploiting the opportunities while focusing on quality and limiting exposure to areas where risI‹s are mispriced. Of course, risks remain in our complex world, but as we have seen, markets are happy to take some uncertainty in their stride as long as the earnings and rate fundamentals remain constructive.”
Cheul‹ Wan Fan, Chief Investment Officer, Asia, Global Private Banking and Wealth, HSBC, said: “Asia remains an important engine of global growth, and we capture structural growth opportunities through our themes focusing on the beneficiaries of the global supply chain reorientation, the rise of India and the ASEAN region, and future middle-class consumers.
“We are bullish on India. We prefer India’s large cap quality companies that can deliver strong earnings growth. We favour Indian banks, consumer and IT companies. In ASEAN, Indonesia’s election implies a certain degree of policy continuity. We think Indonesia can outperform due to solid economic fundamentals backed by strong consumer and infrastructure spending.”
Patrick Ho, Chief Investment Officer, North Asia, Global Private Banl‹ing and Wealth, HSBC, said: “Stimulus measures including expansionary monetary and fiscal policies in China should help support economic growth and could even give way to some tactical upside in the stock market given its low valuation. The closer ties between mainland China and Hong Kong should provide new opportunities for the Hong Kong capital markets despite the global challenges.”
