HSBC Staying Positive on Asian Equities and Credit

HSBC Global Private Banking maintains a mildly overweight position in Asia ex-Japan equities and credit given resilient fundamentals and attractive valuations after the underperformance of Asian markets versus developed market peers in 2021.

Within Asian equities, it is overweight Taiwan, Singapore, Indonesia and Thailand due to their positive fundamental outlook and attractive risk-reward profile. Overall, it is more constructive on the outlook of the ASEAN stock markets with supportive drivers of economic reopening in 2022. In search for carry opportunities i n the Asian credit market, it maintains selective positioning in Asian investment grade Bonds, Indonesian Bonds, Chinese SOE issuers and better quality Chinese high yield issuers.

“We expect the Asian markets will stay resilient to faster Fed tapering and rate hikes due to the substantial fundamental improvement of the regional economies since the ‘taper tantrum‘ in 2013. We anticipate Asian central Banks will stay more prudent in normalising monetary policy as compared to the previous US tightening cycles due to relatively subdued inflation and robust external balances in most countries.

“Consumer price inflation pressures are much more subdued across Asia than in the US and Europe as the region is less impacted by supply chain disruptions. Asia‘s average core inflation has remained subdued at close to historical low levels,” says Fan Cheuk Wan, Chief Investment Officer for Asia, Global Private Banking and Wealth at HSBC.

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