Buy Asian risk assets?
HSBC GAM, the bank’s asset management arm, said in a separate report that, in 2016, Asia risk assets look especially attractive.
The global economy is in a state of `fragile equilibrium’ with a mix of low growth, low inflation and low interest rates. “[E]quities and other risk assets, especially in Asia, are likely to outperform, especially versus developed market government bonds”, the firm said.
“Gradually rising interest rates in the US are likely to cause periodic bouts of volatility which should allow us to take advantage of mispriced opportunities in these asset classes which should deliver attractive relative long term returns,” said Bill Maldonado, chief investment officer for Asia Pacific at HSBC Global Asset Management.
An expected “slow-and-low” interest rate hiking cycle is beneficial for equities, and cheaper oil is a positive for Asia’s oil consuming economies, he added.
Despite China’s strong market volatility, the firm sees some positives.
“The Chinese government is likely to continue to loosen monetary policy, benefiting both onshore and offshore listed Chinese equities. The reallocation of wealth from deposits to equities by Chinese investors is another ongoing driver.”
