2026-04-30 08:04

Key takeaways Since early April, ceasefire negotiations have led to a rebound in risk appetite. As it will take time for the Strait of Hormuz and oil production to normalise, we believe energy prices are likely to remain elevated. We upgrade Energy to overweight across regions following its recent sell-off, to navigate oil price volatility and generate strong cash flows, while continuing to build resilient portfolios with quality bonds, gold and multi-asset diversification. Recent headlines around the US Q1 earnings season affirm the continuation of the tech capex cycle. As previous concerns over excessive investment and AI disrupting software companies have eased, and Technology continues to be supported by improving earnings expectations and reduced valuations, we have further increased our exposure to global and US technology and upgrade European IT to overweight due to stronger earnings visibility. China’s Q1 GDP grew 5% y-o-y, supported by robust manufacturing and solid exports, along with a policy tilt towards domestic support and innovation. With a diversified energy mix, the Middle East conflict appears to have had a limited impact. Earnings growth is expected to be around 10%, with valuations broadly in line with historical averages at 11x. We continue to favour Chinese equities, balancing innovation and high-quality dividend stocks. We downgrade Japanese equities to neutral due to the country’s vulnerability to higher oil prices and less attractive valuations. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-monthly/markets-shift-towards-tech-led-structural-opportunities/

2026-04-27 12:01

Key takeaways Month-to-date, the JPY has been the weakest G10 currency, and the EUR has also underperformed. Our base case remains for USD-JPY to move lower by yearend, but we see potential upside risks over the near term. If energy-related disruptions continue and Eurozone activity weakens further, the EUR is likely to face downside risks. FX markets are likely to remain sensitive to geopolitical developments. Escalating Middle East tensions typically support the USD, while de-escalation tends to weigh on it. Within the G10, the JPY has been the weakest currency month-to-date, with the EUR not far behind (Bloomberg, 23 April). Bearish sentiment towards JPY is consistent with Japan’s macro exposure. Japan is the largest net energy importer among advanced economies (scaled by GDP) and has deep economic ties with the Gulf region. Despite these headwinds, USD-JPY has traded in an unusually narrow range recently. A cautious Bank of Japan (BoJ) and domestic fiscal challenges may delay USD-JPY’s convergence lower towards levels implied by rate differentials (Chart 1). Key fiscal watchpoints include the possibility that funding for fuel subsidies may run out in mid/late May and that a supplementary budget may be proposed. Offsetting factors include net portfolio inflows (foreign buying of Japanese equities and bonds month-to-date in April, alongside Japanese selling of foreign bonds) and firm verbal intervention from the Ministry of Finance (Katayama: “bold action”; Bloomberg, 17 April), may help cap USD-JPY. Our base case remains for USD-JPY to decline by year-end. Near-term upside risks include a more dovish BoJ, a more hawkish Federal Reserve (Fed), escalation in the Middle East conflict and renewed oil-price highs, and further fiscal slippage in Japan. Source: Bloomberg, HSBC Source: Bloomberg, HSBC Turning to the EUR, Middle East developments have been the key driver, but cyclical factors (such as growth, inflation, and policy response) are likely to determine the magnitude of moves. Eurozone flash composite PMI disappointed in April, with the private sector returning to contraction for the first time since December 2024. Price components also point to a stagflationary impulse. If disruption around the Strait of Hormuz persists, the negative impact on Eurozone growth and inflation is likely to intensify, undermining the EUR (Chart 2). https://www.hsbc.com.my/wealth/insights/fx-insights/eur-and-jpy-underperformance-risks/

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 Market pricing for a September Federal Reserve rate hike has fallen to its lowest level since mid-June. Chair Warsh got the ball rolling in late-July, by reaffirming his commitment to 2% inflation but questioning whether the Personal Consumption Expenditures (PCE) index was the right inflation gauge. Asia has delivered a broadly resilient Q2 earnings season, with the region’s AI supply chain doing much of the heavy lifting. South Korea and Taiwan’s major technology-heavy segments have seen very strong profit growth, driven by demand for AI-related memory and hardware. Emerging markets are enjoying good news on inflation, with July data revealing downside surprises across Latin America, CEMEA, and EM Asia. With central banks in Brazil, Hungary, and Türkiye already cutting rates, further space for monetary policy easing across the EM complex has the potential to broaden market gains beyond chip-heavy South Korea and Taiwan. Chart of the week – Broadening out continues While the US continues to lead global consensus profits growth, an important story this year has been the broadening out of profits and market performance, initially into emerging markets and more recently into parts of Europe. Much of the broadening has been tied to the AI boom. Market focus has shifted within the AI ecosystem, as well as into sectors such as Industrials, Utilities, and Materials. In emerging markets, Taiwan and South Korea have been key beneficiaries of this build-out (although South Korea has seen recent volatility, see page 2). In Europe, stocks have managed to keep pace with the US this year despite the region’s subdued GDP growth and a stock market that lacks deep exposure to AI. In part, that’s down to the fact that European earnings are now accelerating after two years of zero growth. In fact, they’re shaping up to be among the strongest in years, with 2026 year-on-year earnings growth at around 18% for MSCI Europe. Revisions are at a five-year high, with upgrades spread across most sectors, and strong profits in Energy, Financials, and Industrials. With starting expectations and valuations lower, improving profits potentially reinforce Europe as an “anti-bubble” market where a pick-up in previously ignored sectors can give investors a reason to look beyond the US. Overall, the global opportunity set may be widening. While AI remains a key market driver, firmer earnings momentum in Europe and continued strength in parts of emerging markets is further evidence of broadening out – supporting the case for wider regional exposure in portfolios heading into 2027. Market Spotlight In good health Healthcare stocks have quietly been writing a comeback story. After a tough start to 2026, the sector has performed well during the summer, with its defensive earnings appealing to investors looking for alternatives to episodic volatility in crowded tech and AI trades. That shift has been helped by fading US policy worries around drug pricing and tariffs, plus upbeat mid-year conference sentiment, and strong product development pipelines. With Washington-driven risks now looking more manageable, earnings visibility is improving and bearish sentiment towards the sector has started to unwind. One underappreciated tailwind is the re-acceleration in pharma dealmaking: around USD60bn has already been deployed in acquisitions year-to-date, which can provide a valuation floor and should provide support to small- and mid-cap biotech stocks via takeovers and partnerships. Overall, valuations look more compelling after a de-rating (with a forward P/E for the sector of around 17x in the US), and revisions are improving. And while a pullback wouldn’t be surprising after the early summer surge, any dip could be a potential opportunity into the second half of 2026, with healthcare offering both portfolio diversification (helped by its defensive qualities) and a hedge if tech leadership disappoints. 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 company, 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 14 August 2026. Lens on… Warsh away the worries Market pricing for a September Federal Reserve rate hike has fallen to its lowest level since mid-June. Chair Warsh got the ball rolling in late-July, by reaffirming his commitment to 2% inflation but questioning whether the Personal Consumption Expenditures (PCE) index was the right inflation gauge. Investors read this as dovish, as several other measures of underlying inflation are running well below the core PCE rate of 3.3%. The latest consumer price data reinforced that view. Core CPI eased to 2.5% year-on-year, while the three-month annualised rate was just 1.7%. Wedged between Warsh’s comments and the benign CPI print, a softer labour report has also weighed on rate expectations. Payroll growth undershot forecasts, and while the unemployment rate eased to 4.1% in July, that reflected lower participation. Modest wage gains and weak surveys of job prospects point to more slack than the jobless rate implies. If August inflation and employment data show more of the same, the Fed is likely to stay on hold in September. For markets, that could help keep volatility subdued, even if a highly complex and uncertain backdrop means that investors shouldn’t get too complacent. Chips slip, China rips Asia has delivered a broadly resilient Q2 earnings season, with the region’s AI supply chain doing much of the heavy lifting. South Korea and Taiwan’s major technology-heavy segments have seen very strong profit growth, driven by demand for AI-related memory and hardware. Japan has also delivered solid and relatively broad-based earnings, while India’s growth has been more moderate, with divergence across sectors. In terms of market performance, however, leadership has rotated recently. Despite strong results, semiconductor-led markets have lagged in Q3-to-date – with MSCI Korea still down roughly 20% despite a recent rebound. This reflects some unease about index concentration in a small number of tech heavyweights, and the durability of AI-related capex. Instead, mainland China has outperformed, with around a 10% gain quarter-to-date, supported by rallies in Consumer Discretionary (notably e-commerce), Healthcare, and Materials. For investors, Asia’s earnings outlook remains supported by AI, but the opportunity set is broader than chips alone – offering, in some markets, more reasonable valuations and potentially attractive yields. In mainland China, upcoming earnings and further innovation in tech and AI could extend the recent rally and, over time, support a re-rating. A heated outlook Emerging markets are enjoying good news on inflation, with July data revealing downside surprises across Latin America, CEMEA, and EM Asia. With central banks in Brazil, Hungary, and Türkiye already cutting rates, further space for monetary policy easing across the EM complex has the potential to broaden market gains beyond chip-heavy South Korea and Taiwan. However, investors must remain vigilant. Latest forecasts project a sharp rise in the Relative Oceanic Niño Index for H2 2026, approaching 2°C. This temperature anomaly – measuring how Pacific surface temperatures deviate above historical baselines – signals a very strong El Niño. By disrupting global atmospheric circulation, it could trigger major droughts and floods that strain agricultural output and push food inflation higher. Although this is not an unprecedented development, the timing is bad. Many EMs are already grappling with Hormuz disruptions, which have sparked risks of gasoline and diesel supply shortages and pushed up global fertiliser prices. It also serves as a stark reminder that in a world of volatile geopolitics, active fiscal policy, and extreme weather, structurally higher inflation pressure and increased macroeconomic volatility is the new normal for investors to contend with. 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. Source: HSBC Asset Management. Macrobond, Bloomberg, Refinitiv, FactSet. Data as at 7.30am UK time 14 August 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 14 August 2026. Market review Global equities experienced a mixed start to the week, as persistent geopolitical uncertainty pushed oil prices higher and revived worries over higher-for-longer US rates. However, a softer US CPI inflation print on Wednesday lifted sentiment, alongside further upbeat Q2 earnings results. In the US, the S&P 500 reached a new all-time high, while the equal-weighted index outperformed. European markets were range-bound, while Asian markets were mixed, with semiconductor-heavy bourses leading the gains; South Korean equities staged a notable rebound after recent volatility. In rates, the benign CPI report prompted investors to pare back expectations of an early Fed rate hike, driving a modest steepening of the Treasury yield curve. In FX, the US dollar broadly strengthened against major peers, while emerging market currencies diverged. Gold prices pulled back after their recent strong run. 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/