The global economy should continue to lend support to credit fundamentals in the second half of the year and beyond, while the inflation outlook should keep monetary policy stable, HSBC Global Asset Management Ltd said on Thursday.
HSBC expects the world economy to expand 3.3 percent this year and grow 3.1 percent next year, although the pace might vary in different regions, New York-based senior product specialist Julian Moore told a media briefing in Taipei.
“Corporate earnings have been strong and revenue growth has remained solid, despite ongoing uncertainty,” Moore told reporters on his first leg of an Asian tour that would also take him to Hong Kong, Singapore and Japan.
The US is forecast to see GDP growth of 2.9 percent this year and 2.6 percent next year, outperforming that of the eurozone and the UK in both periods, Moore said.
HSBC is looking at 4.8 percent growth for the Asia-Pacific region this year and a 4.7 percent expansion next year, making it the best performer by growth rate, he said.
Global consumer prices might rise by 2.9 percent this year and ease to 2.7 percent next year, Moore said.
Inflation might rise 2.5 percent in the US this year and slow to 2.2 percent next year, higher than the 1.7 percent and 1.6 percent predicted for the eurozone, he said.
That is because crude oil prices would hold relatively stable, with some OPEC countries increasing oil production and the US sanctions on Iran reducing supply, Moore added.
Against this backdrop, global central banks would keep monetary policy stable, while the US Federal Reserve might move on a slow and steady trajectory, Moore said, adding that HSBC expects one more interest rate hike by the Fed this year, likely next month.
“A faster [tightening] pace would have negative impact on global financial markets,” Moore said.
HSBC is overweighting US bonds and underweighting debts in Europe because the former enjoys more attractive credit fundamentals in terms of valuations, default rates and yields, he said.
The supply of new US investment-grade equities has remained strong this year, following a record-breaking volume last year, Moore said, adding that the continued global search for yields is favorable for credit markets.
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