HSBC Global Asset Management

Five insights in five minutes

Sehr geehrte Damen und Herren,

diese Woche möchten wir Ihnen mit folgenden fünf Themen Anregungen für Ihre Investmentstrategie bieten:

USA: Was als Puffer gegen sinkendes volkswirtschaftliches Wachstum dient
Kohlenstoffdioxid-Neutralität: Vom Übergang zur kohlenstoffarmen Wirtschaft profitieren
Emerging Markets: Gute Gründe für aktives Management von Aktien und Bonds
Märkte: Indikatoren für weiteres Potenzial
Asien: Trend zu mehr Corporate Governance

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Viel Vergnügen bei der Lektüre!

Ihr Team von HSBC Global Asset Management

1. US fiscal stimulus

Let’s remind ourselves why investors seem to care so much about a new fiscal stimulus package. Democrats are gunning for another two trillion dollars of aid on top of the roughly three trillion dollars spent so far. The latter included a $600 per week add-on to individual benefits, which was replaced in August by a $300 per week programme for up to six weeks. When this rolls-off, the hole in personal incomes will be equivalent to roughly $450 billion (annualised) versus continuing payments at, say, $400 per week. Assuming half of any new handout would have been spent, and consumption is 70 per cent of gross domestic product, US growth risks being about five per cent lower in the fourth quarter without a new package. Sounds nasty, however we should not forget that high levels of wealth and savings provide support for US spending, as our analysts make clear in the chart below.

Themes: all asset classes

2. Low-carbon

It’s been quite a fortnight for moving air. On Tuesday the UK prime minister said he wanted Britain to be the ‘Saudi Arabia of wind’. That followed last week’s milestone: NextEra Energy, an electric utility and largest generator of wind and solar power globally, matched the market cap of ExxonMobil. If you’re wondering how this happened, Exxon’s shares are currently ten times cheaper than Next Era’s relative to annual sales, with long term oil demand expected to be stifled as more governments and corporations are committing to carbon neutrality. Just last month China added itself to the list of major economies to have made this commitment. The divergent fortunes of Exxon and NextEra is playing out across markets, with investment strategies positioned for a low carbon transition having benefited this year in particular. All the stranger that documents leaked this week show Exxon is planning to ramp up fossil-fuel production – increasing its annual carbon dioxide emissions by 17 per cent by 2025.

Themes: low-carbon funds, global equities

3. Emerging assets

Here is a chart which highlights why now, more than ever, you need expert portfolio managers and analysts looking after your emerging market securities. It gives us a rough indication of how equity and credit markets react to stress – and lately the two are not in agreement. The grey line shows the performance of stocks with strong balance sheets versus those with weak ones. During the years prior to the pandemic, this equity comfort indictor moved in line with credit spreads, as one would expect. Likewise, the virus caused a rush into quality companies just as spreads gaped. But see what has happened since. Emerging market credit spreads have halved and yet share prices are still flashing red, with investors keeping their preference for solid balance sheets. Based on historical correlations, at least one or perhaps both of these asset classes is out of whack. Just the sort of misalignment that active managers relish.

Performance of EM shares with Strong versus weak balance sheets and EM HY credit yields

Themes: emerging equity and fixed income

4. Market-implied growth

A bullish analyst caused headlines this week by saying that global assets had yet to price in a return to normality. Bears disagreed. After all, with the MSCI World equity index pushing record levels and aggregate bond indices busting new highs, investors would be forgiven for thinking too much growth is discounted right now. Actually, although it feels as if markets are ahead of themselves, it is not the case overall. Our strategists have a simple but ingenious way of showing this. The chart below tracks a portfolio that is long growth-sensitive assets (energy and industrial stocks, credit, and so on) and short defensive ones (precious metals, government bonds, etc.) – as a proxy for the growth markets are implying. As can be seen, the line has barely retraced half of its fall this year, let alone returned to the dizzy heights of late 2018. Now you know what to do if a vaccine is approved tomorrow.

Themes: all asset classes

5. Asia ESG

There are notable exceptions, but it is no secret that Asian firms could improve when it comes to corporate governance. According to our in-house proprietary ESG database, companies in developed western countries generally have an average governance score close to six (on a scale of one to ten) while the mean result in Asia is about four. That said, the Asian marketplace is becoming more aware of the crucial role governance plays when it comes to corporate performance. One of the reasons it is often hard to convince investors is because poor oversight can last for years before something goes wrong. But positive correlations between share price returns and governance scores already exist in key industries, when you look carefully. The chart below shows a simple scatter plot for the banking sector, for example. And if governance matters for the major provider of risk capital to Asian companies, accounting for more than ten per cent of the MSCI Asia ex-Japan benchmark, it matters for everyone.

Ten year total return of 51 Asian banks (to end-2019) versus HSBC governance score

Themes: Asia equities and credit, ESG funds, ESG ETFs

Bei Fragen zu den Themen wenden Sie sich gerne an uns.

Mit freundlichen Grüßen

HSBC Global Asset Management (Deutschland) GmbH

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40212 Düsseldorf

Telefon: +49 211 910-4784

E-Mail: fonds@hsbc.de