2025-09-19 12:01

Key takeaways Revenues from live music events are on the rise as festivals and concert attendance reaches record highs. But stakeholders should note major sustainability risks, such as travel emissions, and increasingly, biodiversity loss. Investors should also examine the impact of streamed music on industry emissions and advocate for enhanced practices. Revenue from live music events is increasing as festival and concert attendance reach record levels. However, as discussed in this report, stakeholders should be mindful of significant sustainability risks, such as travel emissions and biodiversity loss. Investors should also examine the impact of streamed music on industry emissions and advocate for enhanced practices. Did you know? Live music events generated revenue of USD34.84bn in 2024 versus music industry’s trade revenue of USD29.6bn Power use accounts for almost 2/3 of a live event’s operational carbon footprint Nearly 30 tonnes of waste was collected at Wembley Stadium event, which was attended by 77,000 fans Greenhouse gas emissions from the US music industry almost doubled from 200,000 tonnes of CO2 to 350,000 tonnes of CO2 between 1977 and 2016 Estimates suggest that between 36g CO2 and 77g of CO2 are emitted during every hour of video streaming High-intensity noise pollution can reduce the activity of bats by 47% Sources: Custom Market Insights, Global Live Music Market 2025-2034; The Powerful Thinking Guide: Smart Energy for Festivals and Events, 2017; Brent Council Planning Committee Report, April 7, 2021; 'Ever wondered how we clean up Wembley Stadium after a game?’, The FA, 28 August 2019; The Cost of Music, Kyle Devine, the University of Oslo, Dr Matt Brennan, the University of Glasgow, 2019; G Kamiya, The carbon footprint of streaming video: fact-checking the headlines, IEA, 11 December 2020; J Hoker et al., Assessing the impact of festival music on bat activity, Ecological Solutions and evidence, 30 June 2023. The greening of live music events Live music events, including concerts and festivals, are major revenue earners for the music industry. In 2024, these events generated USD34.84bn, surpassing the USD29.6bn from music industry trade revenues, which include streaming, physical products, performance rights, synchronisation, and downloads. Fan attendance continues to hit new highs, and live event revenues are projected to grow four times faster than overall consumer spending. While this boom benefits local economies, it also brings higher environmental costs, affecting the sustainability of these events in the following ways. Transportation – Fans and artists travelling to the venues, whether by road or air, are the biggest contributors to a venue’s carbon footprint (Figure 1). Venues – Food wrappers and plastic cups are a usual occurrence on the floors of music venues after events, producing tonnes of waste that requires sorting and disposal. Merchandise – Printed artist T-shirts are fan favourites; however, their production and disposal face the same issues as the fashion industry. These items are often cheaply made with low-quality materials that don’t last, adding to the fast fashion problem. Figure 1: Carbon footprint of a tour Source: BBC (2019) Energy – Lighting, sound systems, heating and cooling requirements, instruments and refrigeration are all major contributors to a venue’s energy consumption. Power usage accounts for almost two-thirds of a live event’s operational carbon footprint. Research shows that live events are often inefficient in their power usage. For example, Netherlands-based Watt-Now monitored 270,000 data points from outdoor events over a two-year period and found that 77% of generators being used had an average load of less than 20%. Generators using hybrid power are becoming best practice in the sector, although some alternative energy sources come with their own sustainability risks. Music venues, e.g., stadiums – Beginning with design, venues must be adaptive to a changing climate, including rising temperatures and extreme weather events. Additionally, they must be constructed in a sustainable manner, adhering to labour rights and conditions. Industry stakeholders and researchers have suggested several steps to improve the sustainability of the music industry, which we summarise in Figure 2. Figure 2. Steps to improve the sustainability of the music industry Source: HSBC Let’s talk about streamed music Some commentators expect the rise of live streaming, hybrid events and on-demand concerts/videos to lower the music industry’s the carbon footprint. But, in practice, the environmental impact of digital music is hard to evaluate. A joint study by the Universities of Glasgow and Oslo found that the US music industry’s greenhouse gas (GHG) emissions almost doubled between 1977 and 2016, from 200,000 tonnes to 350,000 tonnes of CO2, which has been attributed to the rise in streaming services. However, carbon emissions from streaming have been declining in recent years, despite a rise in total streaming activity. Streaming of content involves data centres, content delivery networks, Internet transmission, and end-user devices like smartphones, TVs and tablets. Studies suggest that each hour of video streaming emits between 36g and 77g of CO2, but complexities in calculating the various elements involved, such as the energy efficiency of technology or energy/emissions allocation to shared elements, make it difficult to narrow the range to a more precise number. Assessing global streaming emissions is challenging due varying emissions across markets, influenced by each country’s electrical grid factors. For example, the Carbon Trust notes that video streaming emits 55g of CO2 per hour on average in Europe, 76g in Germany and 32g in Sweden. As countries decarbonise their electricity supply and modernise their grids, reducing data transmission intensity, we expect the climate impact of recorded music to fall globally. Greening of streaming Investors are increasingly scrutinising how digital service providers address environmental impacts, especially those related to streaming. Despite efforts, challenges in calculation remain. For example, Spotify aims for net zero emissions by 2030 and has reduced the size of its mobile app, optimised cloud usage and introduced dark mode for TV to cut emissions. However, in 2023, the company excluded Scope 3 Category 11, ‘Use of sold Products’, from reported emissions, highlighting the lack of standardised measurement methodologies for streaming emissions. Stakeholder pressure on firms for more transparency in this area will likely continue to rise. We think digital platform users should consider how they consume music as user devices make up the largest portion of the carbon footprint of music streaming (at just over 50%). To adopt more climate-friendly practices, music lovers can, for example, play music on smaller devices that emit less CO2, such as mobile phones rather than larger devices like TV, or download favourite songs for offline playback which also uses less battery capacity than streaming. The industry is responding Several live music industry participants, such as Live Nation Entertainment, have signed the “Festival Vision: 2025 Pledge”, committing to a 50% reduction in festival-related GHG emissions by 2050. On the music streaming front, major record labels, including Sony Music Group, Universal Music Group and Warner Music Group, joined forces in 2021 to sign a pact aimed at decarbonising the recorded music industry. This agreement requires signatories to either have verified science-based net zero targets or join the UN’s Race to Zero programme. In December 2023, these same record labels launched the Music Industry Climate Collective (“MICC”) to address challenges presented by global climate change. For publicly listed music companies, investors should carefully evaluate the credibility of their emissions targets and transition plans. We think music can serve as a catalyst to affect cultural and social change and the live music industry can do more to improve its sustainability record. Conclusion The live music industry can use its popularity and platform to raise awareness of climate change and sustainability. Investors should also be aware of factors that contribute to the industry’s carbon footprint, especially from concert tours and streaming. On a global scale, the lack of harmonisation standards makes it hard to measure the exact impact of streaming. However, working in concert, all stakeholders can drive the change necessary to help the industry reach its decarbonisation goals. https://www.hsbc.com.my/wealth/insights/esg/why-esg-matters/towards-a-green-day-for-music/

2025-09-19 07:05

Key takeaways The FOMC resumed its policy easing, with a widely expected 25bp cut in September. The details of the decision were bordered on the hawkish rather than the dovish side of expectations. We still see further USD weakness this year. As widely expected, the Federal Reserve (Fed) resumed its policy easing, cutting the federal funds target range by 25bp to 4.00-4.25% at the 16-17 September meeting – the first rate cut this year. The decision was voted 11 to 1, with the lone dissent coming from Fed Governor Stephen Mira in favour of a 50bp reduction. The updated Federal Open Market Committee’s (FOMC) economic projections were small but mostly hawkish, with higher growth and inflation, and lower unemployment (see the table below for details). The median interest rate projections (known as “median dots”) for 2025, 2026, and 2027 are lower than those laid out at the June meeting by 25bp. It suggests two further 25bp cuts in 2025, followed by one additional cut in 2026, more hawkish than market pricing of at least four further 25bp cuts by end-2026 (Bloomberg, 18 September 2025). Our economists still expect only two more 25bp rate cuts (in December and next March) through end-2026. That being said, there is some risk of a bit more easing than is in our economists’ forecast, given the US labour market developments, particularly if jobless claims data were to trend higher. Indeed, the FOMC judged that “downside risks to employment have risen” in its new policy statement. So, if risks were to materialise, this could come in the form of another 25bp rate cut in October, or more easing at some point in 2026, in our economists’ view. Source: Federal Reserve At the press conference, Fed Chair, Jerome Powel, indicated that a 50bp cut was not widely supported, and that the 25bp easing should be viewed as a “risk management cut”. He did not indicate that there had been a big shift in thinking on the FOMC. This perhaps helped remind the FX market that the details of the decision are bordered on the hawkish, rather than the dovish side of expectations. After dropping to a fresh year low, the US Dollar Index (DXY) recovered some initial losses, hovering around 97 (Bloomberg, 18 September 2025). That being said, we think there is little here to undermine the case for further USD weakness in the months ahead, as the prospective rate cuts from the Fed set it apart from other G10 central banks. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/usd-the-fed-cuts-rates-for-the-first-time-this-year/

2025-09-18 12:02

Key takeaways As expected, the FOMC voted at its September meeting to cut the federal funds target range by 0.25% to 4.00-4.25%, a first change after 9 months. Fed Chair Powell characterised it as a ‘risk- management cut’ as unemployment is still low and Fed forecasters may not have great confidence. We maintain our view of only two more 0.25% cuts (in December and next March) through end-2026 due to the resilient US economy and still low unemployment. However, the recent deterioration in labour market data is a dovish risk to our view as we may see little more easing than our forecast. This risk is reflected in the Fed’s new projections, which now see two more cuts this year. With easing underway, resilient earnings in the face of tariffs, and upward earnings revisions, the prospects for S&P 500 corporate earnings suggest an acceleration over the next six quarters. Therefore, we maintain an overweight US equities stance. The tech revolution led by productivity-enhancing AI, nearshoring/onshoring and the reindustrialisation of the US continue to lift growth prospects and valuations. We also maintain an overweight on US IG credit and prefer medium-to-long duration Treasuries as growth moderates and the Fed eases gradually. We expect the USD to weaken further into year-end as Fed easing contrasts with G10 peers. Tariff/geopolitical risks remain a swing factor. Please refer to the full report for details about the event and our investment view. https://www.hsbc.com.my/wealth/insights/market-outlook/special-coverage/fomc-resumption-of-rate-cut-cycle-should-be-accretive-to-markets/

2025-09-16 12:01

Key takeaways Weak July and August data have fuelled hopes for policy stimulus; China plans to rebalance and reflate the economy. Anti-involution campaign is still in the early stages with detailed sector policies likely to be unveiled soon. We expect rate cuts and a resumption of bond purchases; China may intervene more forcefully to stabilise housing. China data review (August 2025) Retail sales slowed to 3.4% y-o-y in August, partly due to a higher base. Distributions for trade-in subsidies resumed in August, but they were not enough to accelerate growth. Moreover, support from subsidies may slow further, given the high base from September last year. A recent campaign to clamp down on excessive spending by government officials on banquets (SCIO, 22 May) also likely weighed on catering sales (which rose 1% y-o-y versus c5% in Q1). Fixed Asset Investment fell to -7.1% y-o-y in August, dragged down by a steeper fall in property investment (-19.5%), while manufacturing and infrastructure investment saw their second consecutive month of decline. Trade uncertainty, the outlook for the anti-involution campaign, as well as extreme weather conditions all weighed on investment. The property sector continued to drag on growth. Aside from weaker property investment, primary home sales fell 10% y-o-y, while floor space starts were down 18% y-o-y, all steeper falls. The renewed weakness may prompt stronger policy actions, as indicated by Premier Li recently (Gov.cn, 18 August). As prior supply-side efforts appear to have made limited progress, a more promising move would be a direct intervention by the central government. CPI contracted by 0.4% y-o-y in August. However, excluding volatile items (food and energy), core CPI continued to improve in y-o-y terms (+0.9%) and stood at its highest level since March 2024. On the producer front, deflationary pressures eased, PPI fell 2.9% (from -3.6% in July), helped by a more favourable base, as well as the ongoing anti-involution campaign. Export growth moderated to 4.4% y-o-y in August, largely on the back of a sharper drop in US shipments, despite continued stronger exports to ASEAN (22.5% y-o-y) and the EU (10.4%). Meanwhile, import growth decelerated to 1.3%, as commodity imports (especially crude oil) were weighed down by lower global prices and weakness in the construction sector due to extreme weather. China Policy Watch – Five FAQs on how to reflate and rebalance After a resilient H1, China’s growth has slowed in July and August. Some market watchers see this as a turning point that will lead to more assertive easing. We have, indeed, seen an acceleration in policy rollouts recently, and we expect China to dial up its policy support using a combination of cyclical and structural measures. We lay out five key questions around China’s policy expectations and what to watch out for in the remaining months of the year. Q1: Recent data surprised on the downside: Will policy step up? Yes, a stronger policy stance is likely to come through but more as a planned move than just reacting to the recent weak data. We expect much of the heavy lifting from fiscal policy, especially from the central government’s budget, while monetary policy will continue to maintain an easing bias. This will not only provide support in the near term but also help the long-term transition, with more structural measures to lift consumption demand and promote technology and innovation. More will be unveiled in the new 15th Five-Year-Plan in October or November. Q2: Anti-involution: Will the implementation be more than “gradual”? The anti-involution campaign is a key plank of China’s effort to rebalance its economy, i.e., to stimulate domestic consumption, while reducing excess capacity in the economy. In 2016, it took a month for PPI to turn positive in m-o-m terms (six months in y-o-y terms). This time it may take longer, but it won’t be too gradual: top officials have set the tone in July and government agencies are working out the details. Once sector-specific policies are formed using supervision and enforcement tools, things will speed up – likely in the next month or two. Q3: Monetary policies: How much policy room does the PBoC have? We think the People’s Bank of China (PBoC) will cut rates again soon but may be approaching their lower limit, given constraints linked to banks’ net interest margins. Liquidity injections will likely follow, including cuts to the reserve requirement ratio and open market operations. The PBoC may also resume treasury bond purchases from the secondary market soon. “Excess demand” that pushed yields to low levels is no longer a concern, given recent investor rotation into equities, while bond issuance may surge, as the government ramps up fiscal policy support. Q4: Fiscal space: Is local government debt a binding constraint? No, for two key reasons. First, the government has already taken significant measures to help alleviate stress in local government debt as seen in the RMB12trn debt swap package announced last year. Second, we are seeing more fiscal reforms to both improve revenue sources for local governments and to have the central government take on a larger role in providing fiscal support. Meanwhile, there is still cRMB3.3trn in new government bonds (general and special bonds) left to be issued for the remainder of 2025. Special bonds will help infrastructure spending and provide funding support for additional consumer subsidies. Q5: Housing: With the changing rhetoric, will there be an upside surprise? The housing sector may rise up in terms of policy priorities: in August, Premier Li re-emphasised the urgent need to stabilise the housing market. Bloomberg reported on 14 August 2025 that the government is considering asking distressed asset managers and central state-owned enterprises (SOEs) to acquire housing inventory from troubled developers. Other than purchase relaxations, urbanisation may boost housing demand, as migrant workers gain access to basic public services, including social housing. Source: LSEG Eikon * Past performance is not an indication of future returns Source: LSEG Eikon. As of 15 September 2025, market close. https://www.hsbc.com.my/wealth/insights/market-outlook/china-in-focus/five-faqs-on-how-to-reflate-and-rebalance/

2025-09-15 08:06

Key takeaways Downside risks to the GBP look set to build… … with growing market concern on the UK government’s capacity to meet its fiscal target, on top of stagflationary signs. That said, US factors will eventually dominate GBP-USD. The UK Treasury announced that the Autumn Budget will be held on 26 November. There is growing market concern on the UK government’s capacity to meet its fiscal target. In March, the government had to make budgetary adjustments to restore GBP9.9bn of fiscal headroom. But a failure to push through spending cuts has resulted in additional fiscal slippage which the government now faces a much larger fiscal gap to fill in November, with estimates (excluding any headroom) ranging from GBP20bn to 40bn (Bloomberg, 3 September 2025). The Bank of England’s (BoE) Decision Maker Panel survey showed further stagflationary evidence. One-year ahead inflation expectations rose to 3.44% (from 3.18% previously), while three-year ahead expectations rose to 2.99% (from 2.80%). Employment expectations fell, illustrating the conflicting signals emerging from the economy. In his testimony to the Treasury select committee on 3 -September, BoE Governor, Andrew Bailey, reiterated his inflation concerns (Bloomberg, 4 September 2025). With the Autumn Budget creating added near-term uncertainty, the BoE is in no rush to cut rates. The market expects the BoE to keep rates steady at its 19 September meeting, and only see a c20% chance of rate cut in November (Bloomberg, 4 September 2025). The combination of sluggish productivity growth, fiscal pressures and bond yields reaching new highs (Chart 1) is providing a challenging cyclical backdrop for the GBP. In addition, the structural challenges of the UK’s twin fiscal and current account deficits (Chart 2) could also weigh on the GBP, in our view. Source: Bloomberg, HSBC Source: Bloomberg, HSBC However, the UK is not alone in facing challenges. There are growing market concerns about the Federal Reserve’s (Fed) independence, while political risks are rising in France. In our view, the GBP is likely to be sensitive to UK budget news over the near term, probably facing downside risks, but US factors (in particular, discussions around the Fed) will eventually dominate GBP-USD. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/gbp-fiscal-risks/

2025-09-15 08:05

Key takeaways With the combination of the Fed’s cutting cycle seen resuming and questions about its independence… …the USD is likely to weaken in the months ahead. But the ECB’s stance is providing static support to the EUR. With the magnitude of the USD’s descent since the start of the year, it is not surprising that some may make the case that the worst is behind us. But our baseline scenario still sees the USD weakening in the coming months. There has been re-convergence in the US Dollar Index (DXY) with its weighted rate differential (Chart 1), after a clear breakdown in these relationships earlier this year when US policy uncertainty was intensifying, especially in the context of tariffs. With this in mind, the pace and size of the Federal Reserve’s (Fed) expected decision to ease will be crucial to the USD. Our analysis suggests that the DXY performance in the six episodes of rate cuts by the Fed over the past 30 years was mixed. Gradual Fed easing can weigh on the USD, but faster easing may not. While there is a greater focus on the cyclical side of the US, political factors are still relevant, especially when considering market concerns over the Fed’s independence. In our view, the combination of the Fed’s cutting cycle seen resuming and questions about its independence would probably point to two scenarios for the USD to decline. One opens a faster USD decline if the Fed needs to lower interest rates quickly and US policy uncertainty intensifies in the coming months. The other one is slower moving whereby the USD weakens gradually, but suspicions linger as to what lies next around the corner. We believe the latter is the more likely scenario, but the direction of the USD’s travel has not changed. Source: Bloomberg, HSBC Source: Bloomberg, HSBC As for the EUR, the latest announcement from the European Central Bank (ECB) came in line with market expectations. On 11 September, the ECB kept its key deposit rate unchanged at 2.00% and said that risks were "more balanced". Our economists’ central case is that the ECB easing cycle is over, but one more insurance cut cannot be ruled out, as the higher US tariffs, a stronger EUR and French political uncertainty all still suggest downside risks to near-term inflation. With EUR-USD converging with its rate differential (Chart 2), the ECB’s stance has been providing static support to the EUR, leaving US factors as the dynamic driver. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/eur-usd-central-banks-diverge/