2026-03-20 12:01

Key takeaways The recent market sell-off was triggered by concerns that incumbent software companies could be replaced by AI start-ups. We believe these fears are exaggerated, as these companies are also well positioned to benefit from AI for greater efficiency. The investor rotation from IT to other sectors broadens opportunities in industrials, materials and utilities. A multi-asset solution will help diversify across asset classes, sectors, markets and currencies. While the US Supreme Court limited the use of IEEPA, the administration quickly responded with a 15% global tariff using Section 122. Import-reliant sectors may benefit from lower near-term cost pressures and reduced legal uncertainty. Overall, resilient US growth, solid earnings and continued AI momentum support our bullish view on US equities, while total tariff revenue is expected to remain stable in 2026, which is also positive for bonds. We favour US investment grade credit over high yield. While the Strait of Hormuz remains de facto closed to energy and goods exports, the strikes on Iran’s South Pars field and attacks on Gulf states’ energy facilities have intensified market concerns about energy shortages. As higher oil prices pose headwinds for India and some EM Asian markets, we downgrade Indian equities to underweight and reduce our exposure to EM Asia to neutral. Our medium-term view remains constructive for risk assets, as stagflation risks are low, especially in the US, and Asia continues to play a key role in geographical diversification. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-monthly/positioning-for-the-risk-of-prolonged-elevated-energy-prices/

2026-03-19 12:01

Key takeaways At its March meeting, the Fed again left the policy rate unchanged at 3.50%–3.75% and signalled a clear “wait-and-see” stance. Persistent inflation and rising geopolitical risks have created uncertainty for Fed members. We maintain our view that the Fed will keep rates unchanged throughout 2026 and 2027. Inflation risks have moved higher, particularly due to the spike in energy prices, while labour market risks have shifted modestly to the downside. Volatile energy prices and geopolitical risks should continue to support safe-haven demand and the USD. We remain overweight on US and global equities, supported by strong earnings and structural tailwinds, as US stagflation risks remain low in spite of the Middle East conflict. In fixed income, we stay neutral on Treasuries given range-bound yields, while favouring investment grade corporate bonds for their attractive yields and emerging market local currency debt for diversification. We complement this with allocations to gold and alternatives to manage volatility and enhance diversification. Please refer to the full report for details about the event and our investment view. “Overweight” implies a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio. “Underweight” implies a negative tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio. “Neutral” implies neither a particularly negative nor a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio. https://www.hsbc.com.my/wealth/insights/market-outlook/special-coverage/fears-of-rising-inflation-keep-fed-on-hold/

2026-03-19 08:05

Key takeaways The Fed held rates steady for a second meeting as the Middle East conflict raises uncertainty. FX remains driven by energy and risk sentiment, supporting USD strength until geopolitical tensions ease. We still look for a softer USD by the end of this year. For the second meeting in a row in March, the Federal Open Market Committee (FOMC) voted to hold the federal funds rate unchanged at 3.50-3.75%. The vote was 11 to 1, with Fed Governor Stephen Miran dissenting in favour of a 25bp rate cut. At the previous meeting in January, both Governor Miran and Governor Christopher Waller dissented in favour of a 25bp cut. The key message of the meeting was that policymakers are inclined to wait and see how the Middle East conflict − through its potentially opposing effects on growth and inflation − ultimately plays out. This stance was reflected in the accompanying statement. While it was revised to acknowledge recent geopolitical developments, the forward-looking section offered little clarity on whether policymakers are more concerned about upside inflation risks or a weakening labour market. The implications, it noted, “are uncertain”. Similarly, the updated “dot plot” did not indicate a meaningful shift in policymakers’ views. The median 2026 policy rate projection, arguably the most relevant horizon for the USD, was unchanged at 3.375%, still consistent with just one cut this year (broadly in line with current market pricing). Our economists still expect the Federal Reserve (Fed) to keep the policy rate steady in 2026 and 2027. The macro projections saw only modest adjustments (see the table below), with the most notable change being an increase in the 2026 PCE inflation forecast to 2.7% (from 2.4%) − an unsurprising move given recent development. Source: Federal Reserve Fed Chair Jerome Powell also reinforced the “wait and see” message in his press conference. He leaned more heavily on uncertainty, noting: “We don’t know what the effects of this will be. Really no one does.” Powell has often described policymaking as operating in a fog − now, markets face the fog of war. As a result, FX markets are likely to remain highly sensitive to energy price dynamics. While the outlook is inherently uncertain, as long as energy prices remain elevated and risk appetite is fragile, the USD is likely to retain the upper hand. We continue to believe that if geopolitical risks fade, much of the USD’s March strength could reverse, leaving scope for a softer USD by year-end. For now, however, with limited visibility on how the conflict evolves, markets − including FX − are likely to remain in a wait-and-see mode. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/usd-fed-pauses-amid-uncertainty/

2026-03-18 12:01

Key takeaways Driven by private investment, policy landscapes and stakeholder expectations, climate and clean tech continue to demonstrate robust investment momentum. Artificial Intelligence (AI) is poised to play a significant role in future growth. While development continues for traditional resources, such as wind and solar, we observe a shift towards EV infrastructure, next-generation batteries and smart grids. The Venture Capital (VC) market is valued at USD1.6 trillion and we believe it offers an important source of capital for the net zero transition. Mapping trends in the private market helps us identify the next innovations and where transition financing is focusing. We find a shift in the sector, with infrastructure and enablers emerging and Artificial Intelligence (AI) playing a greater role in climate solutions. Did you know? In 2024, the climate and clean tech VC market stood at USD122bn, the 6th largest category in the VC space. The global VC market is valued at USD1.6trn, serving as a major funding source for the net zero transition. Artificial Intelligence (AI) investments accounted for 16% of all climate and clean tech VC deals in 2025. Between 2000 and 2023, 87% of global energy patents targeted clean energy technologies. In the EU, more than 40% of climate and clean tech VC deals in 2025 were over USD5mn, up from under 10% in 2019, indicating a shift to larger, capital-intensive projects. Investment in AI solutions within climate and clean tech grew fivefold between 2018 and 2022, underscoring AI’s rising importance in decarbonisation. Sources: PitchBook, 'Energy Technology Patents Data Explorer’, IEA, 05 Aug 2024 1. The pivotal role of technology in the net zero transition Extreme weather events and impacts from climate change are intensifying globally, with both CO2 levels and ocean heat content continuing to reach record highs. Rising greenhouse gas emissions are pushing temperatures closer to the critical 1.5ºC threshold. However, significant advances in climate and clean technologies over the last few decades have been pivotal in reducing emissions and strengthening community resilience to climate risks, thereby supporting economic growth and security. By addressing the challenges of rising temperatures, these innovations are driving productivity and enhancing societal well-being. In 2024 alone, the venture capital (VC) market invested USD122bn in climate and clean tech, with key sectors including AgTech, HealthTech, EdTech and Infrastructure. Analysing these advancements helps us understand how the landscape is evolving and where disruption will occur, while access to capital remains a key factor in the pace of net zero delivery. Existing climate and clean tech, particularly wind and solar, have seen considerable growth in installed capacity. In 2023, solar generation rose by 23%, reaching 1,600TWh – the highest growth among renewable technologies. This success is enabling further innovation in clean energy sources and supporting the integration and efficiency required for the net zero transition. Driven by private investment, policy landscapes and stakeholder expectations, climate and clean tech continue to demonstrate robust investment momentum. While challenges such as policy and geopolitical uncertainty persist, opportunities are emerging as the sustainability landscape evolves and the transition to net zero accelerates, with Artificial Intelligence (AI) poised to play a significant role in future growth. 2. VC investment in climate and clean tech VC data tell us a great deal about innovation in technology and provides important funding for businesses developing potentially transformative solutions. Tracking broad trends in VC can provide useful information to investors, particularly given both the size of the VC industry and its focus on emerging and disruptive business models. Chart 1. Share of VC capital invested in 2024 Source: Morningstar, HSBC as at 10 October 2025 (using weekly data) Our analysis of the VC market shows that climate and clean tech represents 5% of VC capital invested in 2024, ranking as the 6th largest category after technology, media and technology (TMT), Software as a Service (SaaS) and AI (Chart 1). When we consider VC deal volume, climate and clean tech climbs up the rankings, representing 7% and the third largest segment. This suggests that, while overall capital invested is comparatively lower, the sector is experiencing a higher number of transactions within the broader VC market (Chart 2). Chart 2. Share of VC in 2024 Source: Pitchbook Data, Inc., May 2025, HSBC: Note: SaaS (Software as a service) 3. Evolving trends and opportunities In the VC market, emerging spaces refer to industry verticals within a sector characterised by early-stage investment and technological development. These areas are poised to attract further capital and drive innovation in the climate and clean tech spaces. Chart 3 highlights global emerging spaces within the climate and clean tech category from 2023 onwards. Key to the net zero transition, these technologies provide applications across renewables, industry, nature and efficiency to drive decarbonisation and inclusive resilience. Chart 3. Climate and clean technology emerging spaces (total capital invested, USD million, 2023 onwards) Source: Pitchbook Data, Inc., May 2025, HSBC We believe investment in climate and clean tech is increasingly focusing on enablers of the net zero transition. Development continues for well-established technologies such as solar and wind power. However, we see a shift towards technologies to further integrate and build efficiencies, for example, electric vehicles (EV) charging infrastructure to support the deployment and integration of EVs, as well as smart grids and batteries to effectively store and distribute power. Below, we provide insights into key technologies in the emerging space. EV charging infrastructure: Despite widespread ambitions, slow infrastructure buildout has been a key factor slowing global EV adoption. Key concerns regarding charging include localisation, access and charging experience. Some countries are more developed than others with China currently having more than 3x the number of charging points than Europe. Energy Storage: We view energy storage as a key energy transition enabler, providing flexibility to drive renewables and electrification growth. We expect explosive growth to continue with global battery energy storage capacity additions to rise 4x by 2030, with China, the US and Europe leading the way. Hydrogen: With applications across both energy generation, sustainable transport and industry, hydrogen, in theory, can play a pivotal role in the net zero transition. However, medium-term growth ambitions have faced a reset. Increased costs and project delays have dampened the technology’s popularity; however, policy clarity improvements could help drive investment. Nuclear: Growing in popularity in recent years, nuclear energy sources, including Small Modular Reactors (SMRs) aren’t without controversy. But their zero-carbon appeal and the rise of energy-hungry AI models mean that nuclear has come back into the picture to address the growing electricity demand and work towards climate goals. We believe extending the life of nuclear plants also makes economic sense, especially in Europe and the US. Geothermal: We believe there are growing opportunities in geothermal energy because of its stability, low emissions and declining construction costs, especially in regions such as Asia. We estimate that next-generation geothermal energy in developing Asia could reduce fossil fuel emissions by c17%. Conclusion We identify areas of growth across the VC market which have the potential to attract new investment. While development continues for well-established resources, such as wind and solar, we observe a shift towards those that enable further integration and efficiency, such as EV infrastructure, next-generation batteries and smart grids. https://www.hsbc.com.my/wealth/insights/esg/why-esg-matters/climate-tech-vc-boosts-net-zero-transition/

2026-03-18 08:04

Key takeaways China’s 4.5-5.0% GDP target supports a strong start to the 15th FYP with room for reform, restructuring, and risk control. Fiscal policy remains proactive and front-loaded, focusing on infrastructure investment and improving livelihoods. Policies are prioritising technology advancement and capital market reforms, and the unified national market agenda. China data review (Jan-Feb 2026) Fixed Asset Investment grew by 1.8% y-o-y in Jan-Feb supported by a 12% y-o-y rebound in infrastructure investment, driven by accelerated fiscal support from front-loaded government bond issuance. With fiscal policy set to remain robust and the quota for new financing policy tools expanded to RMB800bn, infrastructure should help deliver a strong start to the first year of the 15th Five-Year Plan (FYP). Industrial production stayed resilient in Jan-Feb, up 6.3% y-o-y, driven by sustained strength in railway, ship and other transportation equipment (+13.7%), and computer & communications (+14.2%), supported by strong export growth (ships +53%, semiconductors +73%). Meanwhile, domestic policy-driven industrial upgrading and the push for technological self-reliance continued to boost equipment (+9.3%) and high-tech manufacturing (+13.1%). Retail sales grew 2.8% y-o-y in Jan-Feb, assisted by a record nine-day CNY holiday, the ongoing rollout of trade-ins, and additional government measures aimed at lifting services consumption. Catering sales were up 4.7%, helped by the longer holidays. Trade-in subsidies had a clear impact on consumer goods demand too. As of 16 March, this year’s trade-in programme generated RMB323bn in sales, up 3.2% y-o-y (source: CCTV, 16 March). China’s trade flows have pulled ahead at breakneck speed. Exports soared by 21.8% y-o-y in Jan-Feb as the decline to the US narrowed and other markets, such as the EU, ASEAN, and Belt and Road countries, maintained growth rates above 20%. Imports, meanwhile, were up 19.8% y-o-y supported by the demand for high-tech imports, which rose 28% y-o-y. CPI lifted to 1.3% y-o-y in February as services prices accelerated by 1.6% y-o-y, thanks to a record nine-day long CNY holiday; gold prices were also a key driver. Meanwhile, PPI deflation continued to ease, coming in at -0.9%, amidst the transmission from higher global commodities prices. NPC Wrap-up: Stimulating domestic demand China’s annual National People’s Congress (NPC) concluded on 12 March, after a week of policy-setting meetings. In addition to the key briefings on the Government Work Report and fiscal budgets, department heads held six press conferences to outline key policy priorities in their respective areas. The headline GDP growth target was set as “4.5% to 5% for 2026, with a commitment to strive for even better results in practice”. We summarise key highlights below. Fiscal policy remains supportive China will maintain a proactive fiscal stance, with the central government absorbing a larger share of spending. This shift is a response to ongoing pressures from weakness in the property market, subdued price levels, and slower tax growth, as well as the need to kickstart the 15th FYP. The government is front-loading fiscal support, accelerating bond issuance, and aiming to implement reforms to align local and central fiscal management. Spending priorities are closely tied to long-term goals: boosting domestic demand, advancing technology and industrial upgrading, and safeguarding livelihoods. Lifting domestic demand via services and infrastructure The subsidy for the consumer goods trade-in programme has been trimmed to RMB250bn, prioritising green and smart products and offline brick-and-mortar retail. However, a new RMB100bn fiscal-financial coordination fund aims to stimulate consumption and investment, potentially mobilising over RMB1trn in credit. On the services side, the Ministry of Commerce plans to further open up sectors including telecoms, biotechnology, and hospitals. The Government Work Report also highlighted a stronger fiscal commitment to protect livelihoods, raise household incomes, and direct public investment towards welfare-related sectors. Major projects are set to be the principal catalyst for higher investment. The 15th FYP outlines 109 projects across the “Six Networks” (water, power grids, computing power, communications, pipelines and logistics), as well as transportation, consumption, education, and healthcare infrastructure. These projects are anticipated to drive total investment to over RMB7trn this year, according to the National Development and Reform Commission. Government funding will play a significant supporting role, with this investment projected to surpass RMB5trn in 2026. Technological innovation and new productive forces Innovation remains a key pillar for China’s structural transition, and under the 15th FYP the government aims to promote technology and innovation development and greater selfsufficiency, including a target to increase R&D spending by at least 7% per annum on average (in line with the 14th FYP). Officials also highlighted plans to strengthen lifecycle financing support via the National Venture Capital (VC) Guidance Fund and a new national M&A fund to support VC exits, potentially mobilising up to RMB1trn. For AI, China aims to grow the market to over RMB10trn by the end of the 15th FYP. This is backed by expanding energy capacity and new infrastructure, such as ultra- large-scale computing clusters, and broader integration of AI into existing industries. Accelerating reforms Capital market reform: Reforms will support innovative firms through deeper ChiNext reform and improved refinancing. For ChiNext, the authorities plan more targeted listing standards, STAR Market-style IPO pre-review for eligible issuers and flexibility for in-process applicants to raise capital from existing shareholders. Refinancing measures will make rules more flexible and user-friendly (e.g., refined strategic investor criteria to attract long-term funds), while sharpening the “support the best, support tech” approach by accelerating approvals for well-governed, market-recognised firms and extending “light-asset, high-R&D” criteria to the main board. Reforms to build a unified national market: The Government Work Report said efforts to build a unified national market will focus on reducing fragmentation and strengthening fair competition nationwide. To address involutionary competition and excess capacity, authorities will deploy a mix of capacity controls, standards, price enforcement, and quality supervision. In addition, they said credit allocation would be optimised to curb excessive competition in certain industries, and signalled support for mergers and acquisitions to help resolve involutionary competition. Source: LSEG Eikon Note: *Past performance is not an indication of future returns. Priced as of 16 March 2026. Source: LSEG Eikon https://www.hsbc.com.my/wealth/insights/market-outlook/china-in-focus/npc-wrap-up-stimulating-domestic-demand/

2026-03-16 12:01

Key takeaways “Safe haven” demand has lifted the USD, but a de-escalation in geopolitical tensions will likely weaken it. Higher oil prices tend to weigh on currencies of large net energy importers, while the CAD and AUD look more resilient. A prolonged conflict could further strengthen the USD and hurt the EUR and GBP, though this is not our base case. At the onset of the latest Middle East conflict, the USD was poised to rise, consistent with a renewed “safe haven” demand and the potential for de-risking – particularly given the build-up of sizeable, short USD positioning since January. Higher oil and gas prices complicate the typical “safe haven” support for currencies, such as the JPY and CHF, while increasing pressure on currencies with large net energy import needs (Chart 1). In a stronger USD environment, only a narrow set of currencies, like the CAD and AUD, is likely to hold up well. USD strength has also been accompanied by tighter US financial conditions, which is typically a headwind for other currencies. However, the tightening has been modest relative to previous stress episodes, suggesting that there may be limits to sustained USD outperformance if cross-asset volatility remains contained. Unlike 2022, the key pillars that previously underpinned a structurally stronger USD — namely a clearly hawkish Federal Reserve (Fed) and weakening global growth — are not evident. Markets continue to price a bias towards gradual Fed easing this year (Chart 2), and leading indicators point to firmer global growth. Together, these factors can support more cyclical currencies and temper broad-based USD strength, reinforcing our central view that a de-escalation in tensions would allow the USD to resume softening. That said, risks remain skewed to the upside for the USD, if the conflict drives a sharp repricing of the Fed path into hiking territory. Source: CEIC, UNTCAD, HSBC Source: Bloomberg, HSBC A further downside scenario would be a prolonged conflict that sustains energy and supply-side pressures and revives stagflationary concerns. In such an environment, the USD will likely be stronger than in our base case, supported by the US being less exposed as a net energy importer (Chart 1 again) and by growth cushioning from the One Big Beautiful Bill. By contrast, the EUR and GBP will likely underperform. While we recognise the risks associated with persistently elevated tensions and oil prices, this is not yet our central scenario. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/prolonged-conflict-vs-de-escalation-fx-implications/