Investment Monthly: Differentiation matters as the market rally continues

Key takeaways

We expect the market rebound in April to continue as significant investments in AI, security and energy independence should keep activity going, supporting margins and earnings. However, the lagged impact of the Middle East conflict may create short-term volatility. To build portfolio resilience, we employ a multi-asset strategy and add alternative assets to enhance diversification.

As high energy prices have raised inflation expectations, we favour the US and mainland China over oil-importing markets and prefer energy stocks to consumer staples stocks across regions. In addition to higher inflation and lower growth risks, political uncertainty over the UK government leadership and fiscal concerns weigh on UK gilts. As a result, we downgrade gilts to neutral and expect two 0.25% rate hikes by the Bank of England this year.

The US-China summit concluded with a potential tariff reduction in “non-critical and non-strategic" areas, along with China’s purchases of aircraft, energy products and agricultural goods, as well as the establishment of a Board of Investment to boost China’s overseas direct investment in the US. The summit has helped restore some degree of business confidence and is aligned with China’s pro-growth stance. The improved bilateral relations further reinforce our overweight position on Chinese equities.

https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-monthly/differentiation-matters-as-the-market-rally-continues/

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Publish Date: Mon, 01 Jun 2026, 07:03 AM

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