HSBC Bank (Taiwan) Ltd (匯豐台灣商銀) expects the US dollar to continue strengthening through to the first half of next year, supported by robust economic growth in the US and two anticipated rate hikes.
In the April-to-June period, the US logged more than 4 percent quarterly growth in GDP and consumption, which — coupled with favorable employment and purchasing managers’ index readings — further supports the bank’s bullish view on the greenback.
“Ahead of other institutions, HSBC turned bullish on the dollar as far back as April, and the currency has risen 5 percent since May,” retail banking and wealth management chief Linda Yip (葉清玉) told a news conference in Taipei yesterday.
Photo courtesy of HSBC
“There is still plenty of life left in the decade-long stock rally,” retail banking and wealth management senior vice president Steven Wang (王金生) said, citing sound fundamentals and rising corporate profits, particularly among US technology giants that have continued to best analysts’ quarterly earnings forecasts.
Global bond markets have seen a correction and some good buying opportunities have emerged, he said.
However, the picture is less clear for other currencies, he added.
The British pound is facing tremendous uncertainties over Brexit, while the Japanese yen would likely fluctuate at about its current level due to its status as a safe-haven currency, Wang said.
The Australian and New Zealand dollars would likely weaken against the greenback, as the nations’ central banks have postponed rate hikes, he said.
Wang urged investors to avoid the common investment pitfalls of inadequate diversification and missing out on rallies when they cut losses or take profits too early.
Investors should follow the bank’s “wealth pyramid” strategy for asset allocation with different emphasis on the goals of wealth growth, accumulation and protection to cater to varying risk profiles ranging from conservative and balanced, to aggressive, he said.
In light of rising demand for short-term US currency investments, HSBC Taiwan has launched a six-month US dollar time deposit campaign with a 4 percent annual rate to bolster its position in the local wealth management market.
The time deposit campaign has a minimum threshold of NT$600,000 (US$19,502) and every customer’s maximum deposit has been set at the equivalent of NT$3 million.
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