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HSBC PB reveals investment ideas for 2018

HSBC PB reveals investment ideas for 2018

HSBC Private Banking has highlighted its most favourite investment styles to enhance performance potential and manage risks in 2018.

As more investors cite high valuations as their primary concern, value strategies are likely to take centre stage this year, the bank noted in its investment outlook, adding that it favours value stocks.

Synchronised global growth will boost performance of small and mid-cap stocks as well this year, it said.

‘Small caps tend to benefit from improving economic growth as they generally have a more local bias than large caps, which can be helpful in areas where local growth is improving, or the currency has appreciated, as in the Eurozone.’

Similarly, technology-driven disruption is making investors to consider the relative benefits of an active management approach and equity long, short strategy.

As such, active managers will likely deliver better performance in 2018 as return dispersion increases, it added.

HSBC is including gold, hedge funds, private equity and private credit, as important portfolio diversifiers and alternative sources of returns this year.

‘Alternatives offers effective solutions to address investors’ question on “How” to invest in 2018 amid market uncertainty,’ it said.

The bank also believes environmental, social and governance (ESG) factors are useful parameters to help investors manage financial risks.

Cheuk Wan Fan, Asia head of investment strategy and advisory said: ‘Driven by strong government support for green investment, rapid expansion of global assets invested in sustainable strategies and rising sustainable awareness of the new generation, we expect to see broader adoption of ESG factors into mainstream investment decisions in Asia.’

HSBC is expecting Asia ex-Japan to achieve well above global average GDP growth of 6.0% this year and 6.2% in 2019, led by robust growth in China and India.

It continues to see structural growth opportunities in the Chinese New Economy stocks and favours stocks and bonds issued by quality Chinese state-owned enterprises (SOE) which will benefit from the supply-side and SOE reforms.

Fan said the Belt and Road Initiative (BRI) would create opportunities in equities and bonds of Chinese and Asian infrastructure, construction, building materials and equipment companies.

‘As such it will create new demand for real estate, trading and logistics companies along the BRI economic corridor.

‘These constructive factors make Asia ex-Japan HSBC Private Banking’s favourite region for equities, with an overweight allocation to China, India, Singapore and South Korea,’ he explained.

Overall, the private bank is maintaining an overweight allocation to global equities, USD credit, and emerging markets hard currency bonds.

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