2026-04-24 12:01

Key takeaways After dipping in March, PMI Flash ticked up in April, led by higher output, new orders, finished goods inventories, and jobs. Even our 100 indicators of growth database suggests manufacturing front-loading and inventory build-up, as firms hedge against the risk of energy input shortages. We expect the ongoing energy crisis to weigh on growth, but the full impact may only emerge after front-loading fades. An unexpected rise After dipping in March, the PMI Flash Manufacturing index rose again in April (from 53.9 to 55.9; see Exhibit 1). Input costs rose at the fastest pace in three years. Output prices picked up pace as well (although not as rapidly as input prices; see Exhibit 2). Survey respondents mentioned that gas shortages are pushing up prices. Yet, all of this did not hurt activity. New orders, output, and employment rose quickly. In fact, the rate of job creation reached a 10-month high (see Exhibit 3 and Exhibit 4). The last time we had a major, though different, supply shock, was during the pandemic. PMI indices contracted over several months then. What caused this unexpected exuberance in April amid an energy crisis? A case of front-loading production ... Our sense is that it is a case of front-loading production. Consumers may want to purchase before retail prices are raised significantly, leading to a rise in new orders. The pump prices of petrol and diesel haven’t been raised yet, and this is protecting purchasing power. Meanwhile, manufacturers may want to build inventories before energy costs rise further. Indeed, input inventories picked up markedly. And holdings of finished goods increased for the first time in six months and at a quicker pace since 2015 (see Exhibit 5). We see this more clearly now compared to previous episodes of oil price increases (eg, 2022). One reason could be that this time it is not just uncertainty around prices, but also availability of energy inputs. Manufacturers may want to produce and stock up before raw materials run out. ... with sectoral differences Having said this, there are sectoral differences that must be noted. Heavy industry versus retail: The recently released core industries data shows that some heavy industries have slowed (see Exhibit 6). These include sectors like fertiliser that are dependent on natural gas, which is in short supply. Quota restrictions around the availability of gas have led to cuts in production. These sectors are not able to partake in production front-loading, as some retail-facing sectors are (continued overleaf). Rural versus urban: Some unrelated developments are also driving new orders. For instance, rural demand is strong on the back of post-harvest incomes from the recently sold winter crop. We see a reflection of this in the spike in currency in circulation and two-wheeler sales (both indicators of rural demand; see Exhibit 7 and Exhibit 8). Formal versus informal: It is also possible that the formal sector is holding up better than the informal sector, as the former has more buffers and access to cheaper energy. Workers in the informal sector may not have the same social security and may be the first to reverse migrate to rural homes during shocks and shutdowns. 100 indicators of growth: Flavours and trajectory We believe the growth shock from the energy crisis will be meaningful as it is not just a price shock, but also an availability of energy issue. We forecast that if oil averages USD80/bbl (USD100/bbl) in FY27, GDP growth could come in at 6.3% (5.7%), lower than the Statistics Office’s 7.6% estimate for the previous year (see key forecasts below). So far, our 100 indicators of growth database shows that, of the data available in March, the proportion growing positively has fallen from 80% to 60% (see Exhibit 9). Much of the fall is in agriculture (which includes fertiliser production), mining (which requires some gas derivatives), and construction (some steel plants are powered by natural gas). Interestingly, overall manufacturing is the only sector continuing to improve, in line with the April Flash PMI and GST revenues for the month. All said, the growth drag can’t be escaped, even though it may show up fully in later quarters, especially when front-loading ends. It will be a tough balancing act for the Reserve Bank of India (RBI) to address rising inflation and slowing growth. We believe the bar for rate hikes is not very low. If oil prices average USD80/bbl in FY27 (and there is a moderate El Niño), inflation will likely remain below the 6% upper bound, and the RBI may not hike rates. However, if average oil prices cross USD100/bbl in FY27, inflation will likely cross 6%, and rate hikes may be in order. https://www.hsbc.com.my/wealth/insights/market-outlook/india-economics/april-pmi-flash-s-intriguing-rise/

2026-04-20 08:05

Key takeaways Gold prices have been highly volatile this year, with the nearterm outlook sensitive to Middle East developments. Gold could resume its rally in the post-conflict environment… …supported by rising global public debt and other risks. Gold has been highly volatile this year, rising to a record cUSD5,450 per ounce on 30 January before falling to a 2026 low of cUSD4,405 per ounce on 23 March, and recovering to cUSD4,800 per ounce. The pullback reflects heavy liquidation amid USD strength (Chart 1), higher US yields, elevated oil prices, weaker equities, alongside the ongoing Middle East conflict. Since the escalation, markets have priced out at least 25bp of expected easing from the Federal Reserve (Fed) by end-2026 (Chart 2), which is also a headwind for gold. Over the near term, our precious metals analyst expects gold to remain headlinedriven. FX is also likely to remain sensitive to shifts in geopolitical risk, with increased tensions typically supporting the USD and vice versa. But over the longer term, we still see a soft USD, which should be supportive for gold. Even if energy-market after-effects persist, a post-conflict environment could allow gold to maintain upward momentum, underpinned by geopolitical risk, economic policy uncertainty, potential USD weakness, shifts in the global order, and ongoing central bank demand. Renewed trade frictions may provide additional support, though likely less than in 2025. Source: Bloomberg, HSBC Source: Bloomberg, HSBC A key longer-term tailwind is deteriorating fiscal discipline, in our precious metals analyst’s view. The International Monetary Fund’s (IMF) Fiscal Monitor report released on 15 April notes global public debt rose to just under 94% of GDP in 2025 and is set to reach 100% by 2029, one year earlier than projected in April 2025. High gold prices are reshaping fundamentals: Mine supply is expected to increase modestly in 2026-27, while recycling should rise more meaningfully after a muted response to date. On the demand side, elevated prices are weighing on jewellery and coin purchases, particularly in price-sensitive emerging markets and increasingly in developed markets. These shifts have not yet undermined the broader rally, but risks would increase if investment demand remained subdued for an extended period. https://www.hsbc.com.my/wealth/insights/fx-insights/gold-to-resume-its-rally/

2026-04-20 07:04

Key takeaways The US dollar has strengthened since the first Federal Reserve meeting under Chair Kevin Warsh, highlighting near-term headwinds to the widely held “dollar down” view. Recent data continue to point to a two-speed economy in China. On one hand, AI-tech, new energy, and advanced manufacturing are leading export competitiveness and industrial strength, keeping growth resilient. But, on the other hand, non-tech and “old economy” sectors are lagging. It has been a week of big political announcements in the UK. But one good news story is that the country’s productivity could be improving. But not everyone agrees. Chart of the week – Magnificent margins Last week’s sell-off in AI-focused technology stocks has revived questions about the durability of margins and the rising cost of the AI buildout. When it comes to tech profits, there are three factors that investors should consider: #1. Profits are powering enthusiasm – and reopening the IPO window. Today’s tech ecosystem is generating far more profit than the wider market – reminiscent of the 1990s, but even more powerful. High profits fill investors with confidence and support appetite for IPOs. Markets are already anticipating more mega-cap and smaller listings in 2026. While the opportunity can be compelling – and trigger fear of missing out – it’s important to have realistic expectations. #2. Today’s profits are being amplified as generous tax incentives (OBBBA) and the AI arms race pull forward capex. This is creating bottlenecks and sharp price increases, with tech net margins at new highs of nearly 27%. These levels are rare: roughly double early-2000s levels and almost triple the long-run global tech average. A key driver is mammoth capex, given that around 40-45% of capex spending cycles back into the wider tech sector. But capex is lumpier than mainstream earnings, so investors are right to question their longevity. #3. Above-average profits may offer limited upside. History is a reminder: in 1999/2000, tech profits surged relative to the market. They rolled over on the realisation that capacity exceeded end-demand. For profits to be durable, capex discipline and end-demand need to keep pace. Overall, the tech opportunity is genuine. However, valuation discipline, diversification, and selective stock-picking remain important. Market Spotlight Concrete, cables, and cashflows Infrastructure stocks – the firms that build and operate essential assets, from energy and transport networks to the AI buildout – got off to a strong start in 2026. They benefitted from a rotation away from high-growth tech into energy, utilities, and other defensive areas. While global equities have since narrowed the gap, infrastructure’s income appeal has quietly strengthened. The sector currently yields around 3.8%, and the yield spread versus broader stocks currently sits near the upper end of its 10-year range. So, what’s the appeal? First, infrastructure cashflows tend to be resilient. Many assets earn regulated or contracted revenues that are inflation-linked, which can be attractive amid spiky inflation and potentially higher-for-longer rates. Second, infrastructure can play defence. In volatile markets, it can act as a stabiliser: it’s underrepresented in major equity indices, and correlations have been trending lower. Third, the long-term tailwinds are hard to ignore: digitalisation, electrification and deglobalisation are multi-year forces that support sustained investment. Overall, infrastructure offers an unusual mix – yield, inflation sensitivity, and structural growth – making it a source of diversified income and portfolio resilience. The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested. The level of yield is not guaranteed and may rise or fall in the future. Past performance does not predict future returns. For informational purposes only and should not be construed as a recommendation to invest in the specific country, product, strategy, sector, or security. Diversification does not ensure a profit or protect against loss. Any views expressed were held at the time of preparation and are subject to change without notice. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. Index returns assume reinvestment of all distributions and do not reflect fees or expenses. You cannot invest directly in an index. Source: HSBC Asset Management, Factset, Bloomberg, Macrobond. Data as at 7.30am UK time 26 June 2026. Lens on… Dollar detour The US dollar has strengthened since the first Federal Reserve meeting under Chair Kevin Warsh, highlighting near-term headwinds to the widely held “dollar down” view. US data continue to point to firm labour markets, with inflation proving more persistent than many expected. Markets took the Fed’s emphasis on price stability as a signal that policymakers remain willing to tighten if needed. Investors have therefore priced a more hawkish path, with consensus now expecting one Fed hike before the end of 2026. That shift has supported the dollar, reinforced by doubts over how far other central banks – especially in Europe – can keep tightening amid weaker growth. There is an important nuance. A sharp fall in oil prices, as seen last week, would normally weaken the dollar by easing inflation fears and reducing the perceived need for tighter policy. Instead, the dollar has strengthened, suggesting that markets are prioritising the risk of further Fed tightening over the improved inflation outlook. From bricks to bytes Recent data continue to point to a two-speed economy in China. On one hand, AI-tech, new energy, and advanced manufacturing are leading export competitiveness and industrial strength, keeping growth resilient. But, on the other hand, non-tech and “old economy” sectors are lagging. This split reflects a bigger structural shift: away from credit-intensive, property- and low-cost manufacturing-led growth, towards a model powered by tech innovation. It also highlights a strategic shift in national priorities centred on self-sufficiency in the advanced tech supply-chain, and global leadership in setting tech standards. For Chinese stocks, this macro split is translating into wider dispersion, with Technology and Materials expected to lead profits growth in 2026–2027. Some equity experts see opportunities in AI localisation, biotech breakthroughs, and upstream plays. Meanwhile, a higher weighting of “new economy” sectors in China’s onshore and offshore indices could boost overall index profitability, which together with undemanding valuations, could drive further performance. Problematic productivity It has been a week of big political announcements in the UK. But one good news story is that the country’s productivity could be improving. UK output has remained stubbornly below its long-term trend since the global financial crisis. But research by academic John Van Reenen suggests that this could be changing. His study of government-collected employment data found output-per-hour has picked-up since the end of 2023. He credits this to fiscal stability, higher public capital investment, and structural reforms. AI could also be a tailwind, helped by the UK’s favourable knowledge-intensive, services-led, and export-oriented mix. But not everyone agrees. Economist and former Bank of England MPC member Michael Saunders reckons the productivity uplift is flattered by falling employment and residual seasonality. He believes gains are skewed towards lower-paid sectors, while cyclical areas like manufacturing and ICT are lagging, in part because of higher labour costs. A tech-led upswing could be a macro boost. And while higher productivity alongside weak jobs growth is unlikely to improve living standards, it could support corporate profitability in some targeted areas of the UK economy. Past performance does not predict future returns. The level of yield is not guaranteed and may rise or fall in the future. For informational purposes only and should not be construed as a recommendation to invest in the specific country, product, strategy, sector, or security. Diversification does not ensure a profit or protect against loss. Any views expressed were held at the time of preparation and are subject to change without notice. Index returns assume reinvestment of all distributions and do not reflect fees or expenses. You cannot invest directly in an index. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. Costs may vary with fluctuations in the exchange rate. Source: HSBC Asset Management. Macrobond, Bloomberg, Refinitiv, Factset. Data as at 7.30am UK time 26 June 2026. Key Events and Data Releases Last week This week For informational purposes only and should not be construed as a recommendation to invest in the specific country, product, strategy, sector or security. Any views expressed were held at the time of preparation and are subject to change without notice. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. Index returns assume reinvestment of all distributions and do not reflect fees or expenses. You cannot invest directly in an index. Source: HSBC Asset Management. Data as at 7.30am UK time 26 June 2026. Market review Equities got off to a volatile start amid a global tech sell-off. US indices were mixed, with the Nasdaq Composite and the Magnificent Seven hit harder. Declines also spread across Asia’s tech-heavy markets, including South Korea, while the Nikkei 225 also fell. European exchanges were broadly positive, with the FTSE 100 outperforming. Oil prices fell further, back to pre-US-Iran tension escalation levels last seen in early March, pushing sovereign bond yields lower. The US Treasury yield curve flattened modestly, and UK gilt yields fell on domestic political news. The US dollar strengthened modestly against a basket of major currencies, while gold extended its decline, briefly falling below USD 4,000 an ounce for the first time since November. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-weekly/

2026-04-17 12:01

Key takeaways Stoking domestic demand and rebalancing trade are key priorities for China’s government this year. Fixed asset investment is showing signs of a recovery while manufacturing may gain from reduced tariff uncertainty. Fiscal and monetary measures, alongside structural reforms, are expected to support consumption. China data review (Q1 & March 2026) GDP rose by 5% y-o-y in Q1, putting growth on track for this year’s government target, but global geopolitical uncertainties may still pose challenges. Growth was largely helped by outperforming exports in Jan-Feb and accelerated fiscal policy. We expect China to keep its focus on “doing one’s own thing well” with continued policy support, primarily via fiscal policy and new spending tools. Fixed Asset Investment rose 1.6% y-o-y in March. Infrastructure investment remained a bright spot, up 7.4%; however, property continued to drag, with overall investment falling by 11% y-o-y. Nonetheless, some property indicators improved a touch: New primary home sales by volume fell 10% y-o-y versus a 16% decline in Jan-Feb, helped by demand in tier-1 cities. Industrial Production rose 5.7% y-o-y in March, softer than Jan-Feb owing to lower exports in March, Chinese New Year effects and drags from the Middle East conflict. Sector data indicates resilience in electronics and transport goods, which supported the better-than-expected headline growth. This underscores China’s strong price and quality competitiveness across related sectors. Retail Sales slowed to 1.7% y-o-y in March, mainly weighed down by a high base and a pullback in the scale of trade-in subsidies. Auto sales (-12% y-o-y) remained the key drag as the purchase tax for new energy vehicles was adjusted from a full exemption to a 50% reduction this year. Communications appliances posted double-digit growth, remaining a structural bright spot. PPI returned to the positive y-o-y territory for the first time since October 2022, rising 0.5% y-o-y in March. The primary drivers were the energy and non-ferrous metals sectors along with the ongoing anti-involution campaign. On the consumer side, CPI rose 1.0% y-o-y, partly lifted by vehicle fuel prices while gold products likely also remained a key driver. Exports eased to 2.5% y-o-y in March amidst an unfavourable base and distortions caused by some seasonal factors. However, imports rose by 27.8% y-o-y, likely driven by domestic policy push for technological upgrading and infrastructure investment, as well as strong global AI-related demand. A great rebalancing China’s 2026 growth target of 4.5-5.0% reflects a maturing economy and a strategic pivot towards sustainable, high-quality growth. The government’s focus is clear: domestic demand will be the primary engine, while there will be deliberate efforts to balance trade. On the up Recent data show fixed asset investment (FAI) is starting to recover after a rare contraction in 2025 across manufacturing, infrastructure, and property. The turnaround is driven by new government funding, RMB800bn in policy-related financial tools, and front-loaded bond quotas from the 2026 budget. Local governments now have more “seed capital” for infrastructure and urban development – last year’s RMB500bn unlocked RMB7trn in projects (people.com.cn, 2 November 2025), and a similar multiplier is expected this year. Ongoing local government debt swaps and repayments of local arrears should further ease liquidity pressure, boost business confidence, and attract more private capital for public projects. Manufacturing investment stands to benefit from reduced tariff uncertainty: following recent US policy changes – including the removal of International Emergency Economic Powers Act (IEEPA) tariffs and the introduction of a Section 122 10% tariff – China’s trade-weighted tariff rate has dropped by c10 percentage points to c25%, narrowing the gap with other major exporters. Diplomatic momentum is also building: China’s foreign minister has described 2026 as a potential ‘landmark year’ for US-China relations, with up to four presidential meetings anticipated, starting with President Trump’s visit to China (South China Morning Post, 23 March 2026). On the consumption side, support will remain robust, with another batch of RMB250bn consumer goods trade-in subsidy and a new RMB100bn fiscal-financial coordination tool to broaden support beyond goods to services and providers. Structural reforms – such as improved social welfare, pension reform, and urbanisation – are also in the pipeline to boost disposable income and raise the share of consumption in GDP over the medium term. Trade is expected to be more balanced. As outbound direct investment grows, it will partially replace direct exports, but supply chain-related trade will expand. During the National People’s Congress in March, officials pledged to “balance trade” and expand imports, e.g., agricultural products, premium consumer goods, and advanced equipment and key components (Gov.cn, 7 March). The government’s commitment to further opening-up, especially in services sectors, should help reduce frictions. Source: Wind, HSBC Source: Wind, HSBC Source: LSEG Eikon * Past performance is not an indication of future returns Source: LSEG Eikon. As of 16 April 2026, market close https://www.hsbc.com.my/wealth/insights/market-outlook/china-in-focus/a-great-rebalancing/

2026-04-17 07:04

Key takeaways US stocks were mixed; Treasury yield curve steepened. European stocks and government bond yields rose. Asian stocks were mixed but mostly lower. Markets US stock indices traded mixed on Thursday, as weakness in chipmakers and other beneficiaries of the AI theme was offset by gains in other sectors, especially some defensive and rate-sensitive stocks. The S&P 500 ended flat. US Treasury yield curve steepened slightly as soft payrolls data reduced near-term Fed rate hike expectations. 2-year yields fell 3bp to 4.14% while 10-year yields closed little changed at 4.48%. European stocks rallied on Thursday with broad-based gains outside the technology sector. The Euro Stoxx 50 rose 1.2%. The German DAX surged 2.2% and the French CAC gained 1.7%. In the UK, the FTSE 100 ended 1.7% higher. European government bonds fell. 10-year German bund yields edged up 2bp to 2.90% and 10-year French bond yields rose 3bp to 3.71%. In the UK, 10-year gilt yields ended at 4.77% (+1bp). Asian stock markets traded mixed but mostly lower on Thursday, with semiconductor shares falling following US tech losses amid resurfacing worries over long-term AI demand. Korea’s Kospi dropped 7.9%, while Japan’s Nikkei 225 lost 2.5%. Elsewhere, China’s Shanghai Composite fell 2.0%, whereas Hong Kong’s Hang Seng rose 0.8%. India’s Sensex was up 0.8%. Crude oil prices consolidated on Thursday after recent declines. WTI for August delivery edged up 0.2% to USD68.7 a barrel. Key Data Releases and Events Releases yesterday US nonfarm payrolls fell sharply to 57k in June, from a downwardly revised 129k in May, below market expectations. Releases due today (3 July 2026) No major releases. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-daily/

2026-04-13 12:02

Key takeaways Geopolitical developments in the Middle East remain the key FX driver. Since the conflict escalated, the USD-oil relationship has strengthened. If that relationship weakens, FX fundamentals may regain influence. Middle East geopolitics remain the primary driver of FX markets, but the headlines are difficult to interpret as tensions can escalate and ease quickly. We believe market direction may hinge on a few practical indicators, notably the extent of shipping disruption through the Strait of Hormuz and the resulting path for oil prices. As geopolitical risk rises and falls, oil can move sharply, shifting market sentiment between “risk-off” and “risk-on”. The table below summarises potential G8 currency performance across three oil-price scenarios. Source: HSBC Since the conflict intensified, the USD and oil prices have moved more closely together, unlike in prior months. This appears to reflect both an energy supply shock and increased “safe haven” demand for the USD. Beyond energy, second-order effects, particularly potential upside pressure on food prices, are also relevant. Disruptions to nitrogen and phosphate fertilizer exports matter because the Middle East represents c36% of global nitrogen trade and c23% of global phosphate exports (S&P Global, 19 March 2026), both essential inputs for food production. This dynamic could leave several Asian and European currencies more vulnerable. Nonetheless, if the positive oil and USD relationship began to show signs of weakening, then it could be an early indication (like ships cross the Strait of Hormuz) of pre-conflict FX behaviours returning. For example, FX fundamentals may regain influence relative to simple energy-price tracking when assessing relative currency preferences. Additionally, as the Federal Reserve (Fed) is neither in a rate-hiking cycle nor has turned outright hawkish, there are underlying factors that may continue to limit broad-based USD strength. https://www.hsbc.com.my/wealth/insights/fx-insights/g8-currencies-under-three-oil-price-scenarios/