[Update] Investment Monthly: Positioning for the risk of prolonged elevated energy prices

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/

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Publish Date: Fri, 20 Mar 2026, 12:01 PM

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