Insights

Insights


Global fixed income strategic forum: insights and views

Asian Fixed Income, Emerging Markets Debt, Global Credit, Outlook, Structured Credit, Fixed Income

1/2021

With covid vaccines now in their early phases of distribution, we think markets will slowly return to normal in 2021. In this context, we continue to find significant long-term opportunities in fixed income, notably in less traditional segments.

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Markets lead economic recovery

Outlook, Macroeconomic

12/2020

While an apparent disconnect between the economy and markets in late 2020 has raised concerns about valuations, a strong factor in the valuation of most risk assets is their long-term outlook. Interest rate cuts have boosted the value of cash flows received far into the future, while expansive fiscal policies have increased earnings prospects and limited corporate defaults. Ultimately, ongoing policy support and “lower for even longer” interest rate policies favor equities over government bonds, although following the 2020 rally we need to have realistic return expectations for the medium-term.

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Investment views: the great rebalancing

Outlook, Macroeconomic

9/2020

In the Q2-Q3 "rally in everything,” we argue that market pricing was not disconnected from the economic facts. However, we believe growth is now set to moderate. Q4 will likely bring a next phase of recovery and a “flattening of the swoosh.” The market needs to adapt to this reality. We anticipate a range-bound scenario, in which investors will focus on income and “clipping coupons,” while keeping a keen eye on political events.

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Debt strategies gain investor interest

Infrastructure Debt

9/2020

In partnership with Infrastructure Investor, HSBC's Glenn Fox and Shantini Nair discuss how infrastructure debt can offer attractive yields combined with relative stability for long-term investors—many of whom feel squeezed between intense volatility and low interest rates.

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Is the recovery in emerging Asia at risk?

Emerging Markets Debt, Asian Fixed Income

9/2020

In these unprecedented times, every country is battling the same virus. Yet the differentiated public health response in different countries, the amount and timeliness of the fiscal and monetary stimulus, as well as structural differences among economies point towards a multi-speed recovery across regions and states. Here we focus on Asian emerging markets countries to assess their resilience for the road ahead.

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2020 Responsible Investment Review

ESG Integration, Responsible Investment

8/2020

This report provides an overview of how we integrate ESG factors, and climate-related risks in particular, into our investment decisions, the importance we place on stewardship and how we engage on systemic market issues.

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The importance of ESG in credit analysis

ESG Integration, Global Credit, Fixed Income

7/2020

In this article, we address ways in which ESG factors are increasingly important in evaluating corporate issuers in light of the impacts of the pandemic on markets, companies, investors, customers and the economy. Key points in our discussion include:

º Current downgrade and fallen angel volumes are at high historical levels and we expect such rating migrations to continue through the full year

º Assessing credit opportunities in the midst of the crisis today needs to incorporate how companies manage their environmental, social and governance risks

º Views on constructing a credit portfolio today in the midst of a systemic shock

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Multi-asset style factors: when should they outperform?

Alternative Risk Premia, Multi-Asset Style Factors

5/2020

In this paper, we analyze the performance of three style factors--Carry, Value and Momentum--across time and across different market regimes to address four main questions.

  • How do style factors behave in different phases of the equity market cycle?
  • How sensitive are style factors to volatility conditions?
  • How do style factors respond to changes in interest rates?
  • Any there style factors that are structurally more cyclical or defensive?

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Roads to a low carbon transition

Low Carbon Economy, Responsible Investment

5/2020

In this paper we examine 10 climate-related scenario models to draw conclusions about company-level valuations. These 10 scenarios are based on two main drivers of the low carbon transition: 1) climate policy and regulation; and 2) cost and performance of the technologies designed to reduce emissions. In our analysis, we identify the common characteristics of relative "climate winners" and "climate losers" across all scenarios.

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Insurance investing in a low-forever world

Insurance

2/2020

In this paper we look into the possible drivers for a low-forever interest rate environment and the impact on the balance sheet and business model for insurers. We then discuss three investment related dimensions along which insurers can make adjustments in order to succeed in such an economic environment.

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