2026-01-20 12:01

Key takeaways An investment rebound is around the corner, supported by the new wave of government funding and projects. “DeepSeek moments” likely to emerge in other sectors, thanks to China’s continued focus on innovation. Reflation and housing market expectations, on the other hand, depend on policy intensity and implementation. China data review (December, Q4 & full year 2025) China’s GDP grew 5.0% in 2025, meeting the government’s target of “around 5%”. However, GDP growth ended the year softer, rising 4.5% y-o-y in Q4, affected, in part, by a high base. The underlying data showed pressures have grown on the domestic economy with investment spending falling 3.8% for 2025 while ongoing resilience in trade helped keep industry production buoyant. Fixed asset investment (FAI) contracted by 3.8% in 2025, marking the sharpest decline in decades. The weakness remained broad-based, with significant falls in December across property (-36% y-o-y), manufacturing (-11%) and infrastructure (-10%). Insufficient “seed capital” likely hit infrastructure, while tariff uncertainties and weak business confidence weighed on manufacturing. Retail sales grew by 3.7% in 2025, slightly above the 3.5% recorded in 2024. However, growth softened to 0.9% y-o-y in December, due in part to a high base from trade-in subsidies in certain products. The breakdown for December shows positive impact of these consumer goods trade-in subsidies, with communications equipment sales rising by 21% y-o-y. Exports closed the year on a strong note, rising by 6.6% y-o-y in December. The trend of trade restructuring continued as exports to the US fell faster, while those to other markets like EU and ASEAN sustained double digit growth. Meanwhile, imports grew 5.7% y-o-y in December supported mostly by hightech products (+13.5%) and infrastructure-linked commodities, e.g., copper. CPI was up 0.8% y-o-y in December amidst stable core CPI (+1.2% y-o-y) and rising food prices (+1.1%), particular for vegetables (+18.2% y-o-y). On the producer front, PPI recorded a narrower y-o-y decline of 1.9% supported by rising prices of non-ferrous metals manufacturing (+10.8% y-o-y), especially copper, which hit a new record high in December. Five key China macro themes for 2026 China’s 15th Five-Year Plan launches this year, setting the strategic direction for the country through to 2030. The main framework was shared after the Fourth Plenum on 23 October 2025, with further details expected at the annual policy meetings in March. We detail our top five macro themes to watch out for in the year of the horse. 1. We expect a rebound in fixed asset investment Entering 2026, new government funding and project approvals should boost infrastructure and manufacturing investment. Faster government payments of overdue obligations will ease liquidity pressures and support business confidence, while a more stable US-China trade relationship may further encourage capital expenditure. 2. Innovation to drive growth Following China’s DeepSeek moments in Generative AI and biotech, further breakthroughs are likely. The government’s latest Five-Year Plan puts strong emphasis on modernising the industrial system and driving innovation, building on years of investment and talent development. Multinationals are also increasing investment to leverage China’s expanding role as an innovation hub. 3. From exporting goods to exporting production capacity China’s exports have shown unexpected resilience, with the goods trade surplus climbing to a record high of USD1.2trn in 2025, driven by competitive pricing, strong performance, and reliability. However, Chinese manufacturers are increasingly pursuing overseas direct investment (ODI) to optimise supply chains and manage trade uncertainties. This trend is in its early stages. While outbound direct investment may partially substitute goods exports, it is likely to boost service exports. Source: CEIC, OECD, HSBC Source: CEIC, HSBC 4. Reflation hopes While some remain sceptical about the impact of the anti-involution campaign, it is a key element of China’s push for a unified national market. New regulations targeting local protectionism and promoting fair competition are being introduced, and their effectiveness will influence the pace of industry consolidation. 5. Housing stabilisation The ball is in the government’s court. Now in its fifth year, the housing correction faces renewed pressures. Recent calls for action in official channels have raised expectations of stronger intervention. One feasible approach is an asset management company model, which could safeguard financial stability, while using the acquired homes for social housing to support urbanisation. Source: LSEG Eikon * Past performance is not an indication of future returns Source: LSEG Eikon. As of 19 Jan 2026, market close https://www.hsbc.com.my/wealth/insights/market-outlook/china-in-focus/five-key-china-macro-themes-for-2026/

2026-01-19 12:01

Key takeaways Gold broke above USD4,600 per ounce, driven by geopolitical risks and Fed independence concerns. FOMO inflows may reverse, increasing volatility, but central bank buying and “safe haven” demand could sustain gold rally… …at least until geopolitical risks ease or Fed easing expectations fade. Gold rallied to new highs recently on elevated geopolitical risks (Chart 1), notably developments in Iran and Venezuela. Any escalation could further support gold prices, while a reduction in geopolitical tensions may exert downward pressure. Concerns regarding the Federal Reserve’s (Fed) independence have also lent further support to gold and weighed on the USD. While a softer USD provides a foundation for gold prices, it is unlikely to drive significant further gains. In addition, rising fiscal deficits in the US and other countries are also boosting gold demand and may become increasingly influential. According to the International Monetary Fund’s (IMF) biannual Fiscal Monitor report (15 October), global government debt is projected to reach 100% of GDP by 2029 − the highest level since the post-World War II period. Global trade frictions continue to provide some support for gold, although this theme is less pronounced than in 2025. On balance, robust central bank purchases and sustained “safe haven” demand − set against a backdrop of ongoing geopolitical and economic risks and a softer USD − are likely to keep gold trading at historically elevated levels. Note: Geopolitical Risk Index (GRI) is compiled by Fed economists Dario Caldara and Matteo Iacoviello. Source: Bloomberg, HSBC Source: Bloomberg, HSBC Our precious metals analyst cautions that inflows driven by “fear of missing out”’ (FOMO) may push gold prices higher over the near term, but these could reverse rapidly at new highs, resulting in greater volatility and a broad trading range. Should geopolitical risks diminish or expectations for Fed easing not materialise (Chart 2), a correction could be intensified by increased supply from mining and recycling, alongside weaker physical demand. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/gold-hit-usd-4600-oz/

2026-01-14 12:02

Key takeaways US action in Venezuela is inevitably raising questions about the new world order… …but the still buoyant markets will be steered by the macro picture and policy outcomes. We recently raised our global GDP forecasts to 2.8% in 2025 and 2.7% in 2026. While 2025 ended with trade uncertainty abating and some optimism that major conflicts in the world may be moving a little closer to some kind of resolution, US action in Venezuela could once again upend the world order. The implications will only become clear in time, so with global growth still seemingly resilient and global inflation still mostly trending lower, financial market optimism has not faded. Muddling through Uncertainty is here to stay though. The global economy in 2025 performed better than most had expected. Despite tariffs, global trade growth was strong, consumer spending held up. The gradual decline in inflation mostly continued. We still expect the global economy to muddle through in 2026, albeit supported globally by fiscal spending and the rollout of AI infrastructure. AI continues to drive multiple K-shaped expansions. In the US, higher-income households (particularly baby boomers) are driving consumer spending, partly on the back of wealth effects from AI equity holdings. The US is also at the forefront of the surge in AI-related investment. This is benefitting Asian exporters that are most exposed to AI-related electronics production – Taiwan, Korea, and much of ASEAN – and related areas of the AI ecosystem. Such rapid growth in world trade is unlikely to be repeated in 2026, given tariffs and such a high base for Asian exports, but we still expect expansion. Source: Macrobond Note: CPI held constant in October due to missing data. Source: Macrobond Volatile US data Although there is now a raft of US data that have become available with the end of the government shutdown, they are still hard to interpret. Payroll softness may have been driven by deferred government job losses, and, while private payrolls are steady, Federal Reserve (Fed) Chair Powell has stated that they could be an overestimate. And with immigration slowing and productivity rising, the unemployment rate edged back down to 4.4% in December. Also, US inflation has come down, but technical quirks are playing a role and globally input prices, particularly memory chips, are clearly on the rise. Moreover, government opening effects and tax cuts should support US growth in 1H26. Fiscal support Outside the US, Europe is showing early signs of recovery (Chart 3), though in 2026 much hinges on the execution of the fiscal support. Asia’s macroeconomic fundamentals have improved, but the recovery in mainland China has underwhelmed, and further policy stimulus will likely be needed to provide a boost (Chart 4). Monetary policy divergence is expected to be a prominent theme this year. We expect Australia, New Zealand, and Sweden to join Japan in raising rates, while the European Central Bank and the Fed stay on hold. In contrast, we see the Bank of England delivering another 75bp of cuts and some emerging market central banks, especially in Asia, continuing to ease. Source: Macrobond Source: Macrobond Our GDP forecasts Our global GDP estimate for 2025 now stands at 2.8%, higher than the 2.7% at the start of the year. We also recently raised our 2026 forecast from 2.5% to 2.7%, much of this is driven by a US upgrade reflecting payback after the government re-opening. That being said we are mindful that another possible US government shutdown could occur at the end of January, which could be a potential source of volatility. Another notable upgrade is in Japan, reflecting the recently approved fiscal stimulus. Note: *India data is calendar year forecast here for comparability. Previous forecasts are shown in parenthesis and are from the Macro Monthly dated 6 October 2025. Green indicates an upward revision, red indicates a downward revision. Source: Bloomberg, HSBC Economics ⬆ Positive surprise – actual is higher than consensus, ⬇ Negative surprise – actual is lower than consensus, ➡ Actual is in line with consensus Source: Bloomberg, HSBC Source: LSEG Eikon, HSBC https://www.hsbc.com.my/wealth/insights/market-outlook/macro-monthly/the-global-economy-in-2026/

2026-01-12 12:01

Key takeaways The USD was the worst performing G10 currency last year and is likely to stay soft in 2026. A significantly stronger USD would require unexpected Fed rate hikes, while other central banks hold or cut rates. The AUD, NZD, and potentially SEK are well positioned, but changes in risk sentiment remain a concern. In 2025, the USD was the worst performing G10 currency, with the US Dollar Index (DXY) falling c9.4% − its largest annual decline since 2018 (Chart 1). As we look towards 2026, the outlook for the USD remains subdued, provided that global economic growth holds steady, the Federal Reserve (Fed) does not raise rates, and US financial conditions stay accommodative. A key variable for the USD’s trajectory is the Fed’s monetary policy. Current market pricing anticipates c56bp of Fed easing by end-2026 (Bloomberg, 8 January). Should expectations for Fed rate cuts be removed, this could offer some support to the USD. However, this alone is unlikely to drive a sustained recovery, especially if other major central banks are expected to raise rates. For the USD to regain significant strength, the Fed would need to begin a rate-hiking cycle much earlier than currently anticipated, at a time when markets are not expecting further tightening from other central banks − a scenario we view as a high hurdle for 2026. That being said, a further significant weakening of the USD also appears unlikely once the Fed’s rate-cutting cycle concludes. Source: Bloomberg, HSBC Source: HSBC Applying our ‘Hierarchy of Needs’ framework to the G10 currency complex (Chart 2), several currencies are notable. The AUD, NZD, and potentially SEK are well positioned, benefiting from improved fiscal outlooks, recovering domestic growth, and the prospect of tighter monetary policy. These factors collectively enhance their relative attractiveness. However, it is important to note that risk sentiment is likely to remain a key driver; in a “risk-off” environment, these currencies could come under pressure. In contrast, the USD, EUR, GBP, and JPY currently lack the same combination of supportive factors. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/the-broad-usd-to-stay-soft/

2026-01-09 08:04

Key takeaways While we remain optimistic about 2026, supported by strong AI adoption and a favourable earnings outlook, the recent geopolitical tensions in Venezuela highlight the continued importance of managing market volatility through multi-asset strategies. Beyond the US and Technology, we are diversifying by broadening our exposure across Asia and other sectors, by investing in gold and diversifying our currency exposure. We remain overweight on US equities, including IT and Communications, while diversifying into Industrials, Utilities and Financials to capture a broadening range of opportunities. Although we do not expect further Fed rate cuts, bonds are important for income generation in portfolios. We prefer US investment grade credit with medium duration. China’s Central Economic Work Conference (CEWC) 2025 reaffirmed policy priorities centred on innovation-driven structural growth, industrial upgrading and a revival in domestic demand through consumption and investment. With a significant EPS growth projection for 2026 (12.5%) and undemanding valuations at 12.3x forward P/E with a ROE of 11.2%, we remain positive on Chinese equities. Our investment approach balances exposure to AI themes and innovation leaders, with high-dividend, quality companies that benefit from both cyclical drivers and structural policy tailwinds. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-monthly/a-bullish-outlook-still-requires-strategic-diversification/

2026-01-08 12:01

Key takeaways UK household and business sentiment ticked higher but not enough to change the fortunes of weak economic data for 2025. Slower inflation and an interest rate cut should support a further improvement in activity to start the new year. ... but the 2026 outlook is fragile, with risks aplenty. An ‘it could have been worse’ sentiment lift The UK spent much of the second half of 2025 worrying about possible tax rises in the Budget. Now, with worst-case scenarios largely avoided, and the Autumn Budget in the rear-view mirror, hopes turn to an improvement in sentiment and a pickup in economic growth. Early indicators for December showed a mildly more positive environment, consumer confidence rose to -17, up two points from November, but it wasn’t enough to break out of its recent tight range. Similarly, the 0.6pt rise in the PMI business confidence in future trading expectations was modest given the degree of Budget-related uncertainty. More broadly, the economy has deteriorated: GDP growth was a meagre 0.1% q-o-q in Q3, real disposable income fell 0.8% q-o-q, the rate of unemployment rose to 5.1% in three months to October, and retail sales fell 0.1% m-o-m in November, suggesting a quieter-than-usual Black Friday. So, the small lift in sentiment in December is unlikely to translate into significantly better official data for that month or Q4 and reflects more of an ‘it could have been worse’ boost to sentiment. Source: HSBC Out with 2025, in with a new year We remain relatively optimistic that Q1 2026 will prove better than the prior quarter. Indeed, there was some positivity that could provide a sound platform: the UK inflation rate fell to 3.2% and the Chancellor’s Budget announcements should help see some sub-2% inflation rates in the middle of 2026. That improved inflation outlook coupled with the soft backdrop described above, helped see UK Bank Rate being cut to 3.75% at the Bank of England’s (BoE) December policy meeting. In our view, interest rates will gradually fall further in 2026, which should enable a pickup in consumer spending and some more investment. That said, our central case for 2026 is a fragile one, households remain cautious, real disposable income growth is meagre, and labour markets are soft. Unemployment could rise further amid subdued demand and further headwinds for businesses including labour costs and higher taxes. And although wage growth is slowing, a further above-inflation rise in the National Living Wage (NLW) in April combined with pockets of recruitment challenges risk the UK’s stagflationary environment persisting, leading to a more uncertain interest rate outlook. We also need no more policy instability and yet one of the biggest risks to the outlook is political, namely the risk of a leadership challenge. The UK spent much of the second half of 2025 worrying about possible tax rises in the Budget. Now, with worst-case scenarios largely avoided, and the Autumn Budget in the rear-view mirror, hopes turn to an improvement in sentiment and a pickup in economic growth. Early indicators for December showed a mildly more positive environment, consumer confidence rose to -17, up two points from November, but it wasn’t enough to break out of its recent tight range. Similarly, the 0.6pt rise in the PMI business confidence in future trading expectations was modest given the degree of Budget-related uncertainty. More broadly, the economy has deteriorated: GDP growth was a meagre 0.1% q-o-q in Q3, real disposable income fell 0.8% q-o-q, the rate of unemployment rose to 5.1% in three months to October, and retail sales fell 0.1% m-o-m in November, suggesting a quieter-than-usual Black Friday. So, the small lift in sentiment in December is unlikely to translate into significantly better official data for that month or Q4 and reflects more of an ‘it could have been worse’ boost to sentiment. Source: Macrobond, GfK, S&P Global, HSBC Source: Macrobond, ONS, HSBC forecas https://www.hsbc.com.my/wealth/insights/market-outlook/uk-in-focus/out-with-2025-in-with-a-new-year/