HSBC Holding PLC yesterday said it is rating US and China equities as overweight for the rest of this year as it redeploys capital from areas with low return on equity to more promising ones.
“We’re positive about US shares that will benefit from [US] President Donald Trump’s tax cuts and infrastructure enhancement programs,” HSBC Private Bank managing director and head of investment strategy for Asia Fan Cheuk-wan (范卓雲) told a media briefing in Taipei yesterday.
In China, the British banking group aims to raise its stakes in new economy drivers that would spearhead the “Made in China 2025” initiative, Fan said, referring to sectors such as artificial intelligence, e-commerce and self-driving vehicles.
The strategy is in line with HSBC chief executive officer John Flint’s statements the group is to invest US$15 billion to US$17 billion to advance growth in Asia and promote new technologies.
“After a period of restructuring, it is now time for HSBC to get back into growth mode,” Flint told investors on Monday.
The company plans to use the investment to speed up growth in Asian franchises and strengthen its operations in Hong Kong and China’s Pearl River Delta region, he said.
US POLICY
The US Federal Reserve was likely to raise policy rates yesterday and in September, as wage and inflation growth rates remain moderate, making a faster tightening unsavory, Fan said.
The Fed might hike interest rates again in March next year, but would stay put thereafter with the global economy approaching the tail-end of the expansion cycle, Fan said.
If things fare well, global economic expansion could sustain despite lingering concerns over trade wars and geopolitical uncertainty, she said.
Against this backdrop, the greenback might strengthen further against euro, British pound and Australian dollar, Fan said, adding that it would likely hold steady against emerging currencies, such as the Chinese yuan,
FOREIGN INVESTMENT
Global funds have increased holdings in Chinese equities to take advantage of its booming consumer electronics and new energy names, HSBC Shanghai-based fund manager Chen Ping (陳平) told yesterday’s briefing.
Overseas investors increased stock purchases by 70 percent to US$190 billion last month, but the figure still only represented a 2.7 percent of total market circulation, suggesting ample room for growth, Chen said.
Foreign funds account for 33.7 percent of South Korean shares and 26.3 percent of Taiwanese shares, HSBC Asset Management Taiwan (匯豐中華投信) said, adding that the fund house is to raise its assets under management by double-digit percentage points this year, and increase its stakes in China and India.
Investors could not afford to ignore China’s rapid GDP growth and economic reform and openness, it said.
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