Investment Monthly: Bull market stays on course despite short-term market dips

Key takeaways

While recent US-China trade tensions have triggered profit-taking, we continue to see further upside for risk assets. Our underweight on US Consumer Staples helps hedge downside risks, and we further add Energy to the underweight list. For bonds, we prefer investment grade and EM local currency government bonds over high yield. A multi-asset strategy helps diversify across asset classes, sectors and currencies, and gold remains a good diversifier.

Rising US tech stock prices have raised AI bubble concerns, but we believe the rally is supported by solid earnings growth and substantial investments in AI infrastructure. However, given elevated US tech valuations, we diversify beyond IT and Communications into Financials and Industrials, and upgrade Utilities to overweight due to increasing electricity demand to support the cloud and AI.

China’s 15th Five-Year Plan reinforces its strategic priorities in domestic demand and supply, technological innovation, household and consumer wellbeing, supporting our overweight on mainland China’s stocks. We upgrade Hong Kong equities to overweight due to a stabilising housing market, increased IPO and M&A activity, robust liquidity inflows and attractive valuations. While Japan’s new Prime Minister is expected to pursue expansionary fiscal policies, funding is challenging amid increasing costs in social security and debt servicing, so we remain neutral on Japanese stocks.

https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-monthly/bull-market-stays-on-course-despite-short-term-markets-dips/

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Publish Date: Wed, 29 Oct 2025, 08:05 AM

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