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News and Insights

31 Oct 2019

Fed cuts rates and signals pause

• At its October meeting, the Federal Open Market Committee of the US Federal Reserve cut the funds target range by 25bp to 1.50 per cent-1.75 per cent

• The Fed now thinks the current stance of policy is likely to remain appropriate

• However, the Committee stands ready to respond to any material deterioration in the economy, noting policy is not on a pre-set course

• Policy action can help stabilise global economic conditions and equity valuations remain relatively attractive. Amid persistent downside risks we therefore retain a pro-risk but conservative investment strategy in our multi-asset portfolios

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Market insight

21 Oct 2019

Expanding horizons

• Over the last few years, institutional investors had to readjust their fixed income allocations to lower-for-longer interest rates

• The resulting hunt for yield has naturally led to an extension of their investment universe outside their historical comfort zone, notably through higher yielding credit segments like high-yield and emerging-market debt

• Diversifying allocations to non-domestic markets revealed profitable outcomes and significantly improved their risk / return profiles

• Going one step further, less liquid and more complex asset classes – e.g. private debt, infrastructure debt, and structured credit – are also being progressively considered to help institutional investors with their liability matching challenge

• Despite this trend, recent surveys show that the majority of their assets remain allocated to domestic markets, primarily because of local regulations but also because integrating new segments, strategies and asset classes can prove challenging in practice

• Extending investment universes outside domestic markets that remain difficult to analyse and price requires extensive research, strong investment, governance and analytical resources to add value

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27 Sep 2019

House Views - Riding the storm

• All year analysts have fretted – wrongly, in our view – over an imminent recession and investment returns have been strong across the board so far

• Nevertheless, the fundamental outlook remains tricky with political uncertainty imposing an economic cost

• As we move into Q4 we are still in the "political-economy cycle" that has characterised much of the year. We need to continue to ride the "storm" of uncertainties

• Our valuation work continues to suggest a pro-risk stance in multi-asset portfolios. However, given downside risks to global growth, we should be careful not to over extend the risk positioning

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24 Sep 2019

Positivity in a negative (yield) world

• Policy rate cuts globally in support of growth have resulted in a sharp jump in negative-yielding debt – totaling 26 per cent of investment grade bonds – and are leading to demand for higher yielding assets. Such an environment is lifting the appeal of Asian credit, given its yield advantage and diversification benefits

• Prospects of continued global monetary easing bias are positive for Asian USD credit spreads. Asian credit, particularly Asian high yield, offers attractive investment opportunities. On a relative basis, the Asian high yield market is offering spread pickup over US and emerging market peers

• Overall credit fundamentals in Asia credit are solid and the default rate is expected to remain stable. The pick up in defaults in the onshore Chinese bond market may cause volatility in the offshore market, but China's policies are expected to provide adequate liquidity in the onshore market, ensuring effective liquidity transmission to the private sector

• For the HSBC Asian high yield strategy, the ability to navigate both risk-off and risk-on market scenarios has contributed to our performance. Credit selection has been critical to our performance and our strong credit research has helped us avoid poorly performing names

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23 Sep 2019

Joanna Munro - New Global Chief Investment Officer

Joanna Munro assumes new role as Global Chief Investment Officer.

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20 Sep 2019

Nicolas Moreau - new Global CEO

Nicolas Moreau has joined HSBC Global Asset Management as Global Chief Executive Officer.

Nicolas joins with impressive credentials and solid experience in leading major financial firms internationally. His appointment illustrates our long-term commitment to grow and further develop our company.

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