HSBC Private Banking is neutral on Chinese markets as it awaits more regulatory clarity before making new bets on the second-largest economy.
HSBC Global Private Banking is neutral on Chinese equities and Chinese U.S. dollar bonds, according to an investment note, as it awaits for «better clarity on regulatory tightening».
The British private bank anticipates that the upcoming Central Economic Work Conference will «set the policy tone to focus on economic growth stabilization for 2022» with expectations for policy easing measures such as additional reserve requirement ratio cuts.
Positive on Asia ex-Japan
In the broader Asia ex-Japan region, the bank maintains a mildly overweight position for stocks and bonds due to «resilient fundamentals and attractive valuations» after the underperformance against developed markets in 2021.
Within the region, the bank is overweight Taiwan, Singapore, Indonesia and Thailand with a more constructive view on ASEAN equities.
It also advises credit investors to be selective across Asian investment grade bonds, Indonesian bonds, Chinese SOE issuers and better quality Chinese high yield issuers.
China’s Green Revolution
In the longer term, HSBC remains positive on China, especially in areas that will benefit from the announced goal of achieving peak carbon emissions by 2030 and neutrality by 2060.
The investment theme – «China’s Green Revolution» – covers opportunities in clean energy and industrial upgrading with a focus on electrification.
Other investment themes for the region include Asia tech leaders, the revival of the consumer sector from reopening hopes and credit opportunities from widening spreads.
«We think investors should focus on the big picture and their long-term investment goals, looking beyond short-term market noise and policy uncertainty,» Fan Cheuk Wan, Asia CIO for global private banking and wealth at HSBC. «Big structural and multi-decade trends such as the net zero transition and digital transformation will create new growth industries.»
