Top of main content

Investment Monthly: Quality assets remain in favour amid tight financial conditions and market uncertainty

1 Dec 2023

Willem Sels

Global Chief Investment Officer, HSBC Global Private Banking and Wealth

Lucia Ku

Global Head of Wealth Insights, HSBC Wealth and Personal Banking

Key takeaways

  • Although developed markets central banks have paused their rate hikes, policy rates should remain high for now, leading to tight financial conditions. We do not think that low quality bonds adequately compensate for rising default risks. So, we continue to favour high quality bonds such as DM government bonds (7-10 years), investment grade credits (5-7 years), and Indian local currency bonds.
  • Continued disinflation in the US (3.2% in October), solid economic growth, lower valuations and the Fed pause are positive for US equities. We remain overweight on US equities and favour US consumer discretionary as disposable income rises while technology is set to lift productivity. Healthcare is also likely to be boosted by innovative technologies and demand for new products.
  • We prefer large-cap companies as they are better positioned amid global economic slowdown and market uncertainty. Apart from US equities, we remain positive on Asia, particularly India and Indonesia. We also see opportunities in South Korea as the global tech cycle improves, alongside reasonable valuations and strong earnings prospects. A focus on quality and diversification remains our core investment strategy to capture growth potential while mitigating risks.

Talking Points

Each month, we discuss 3 key issues facing investors

Asset Class Views

Our latest house view on various asset classes

Sector Views

Global and regional sector views based on a 6-month horizon

“Overweight” implies a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio.

“Underweight” implies a negative tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio.

“Neutral” implies neither a particularly negative nor a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio.

↑ View on this asset class has been upgraded

↓ View on this asset class has been downgraded

Related Insights

 

Stronger-than-expected US economic data and concerns about high bond supply have pushed up...[27 Oct]

 

The Fed paused in June to monitor the effect of rate hikes while the BoE and ECB continued...[3 Jul]

 

Consumer discretionary stocks have significantly outperformed the overall S&P 500...[4 Dec]

Listening to what you have to say about services matters to us. It's easy to share your ideas, stay informed and join the conversation. To improve the protection of customers' rights for the elderly or customers with special needs, the Bank provides relatives or friends to accompany them to participate in the communication to understand the product information, and provides enough time to consider whether to apply for related products. Please contact us via contact center (02)6616-6000 or email csr@hsbc.com.tw if any doubt/concern or further explanation is needed.