Insights

Insights


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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Allocating to Asia - August 2020

8/2020

In this brochure, we explore some key considerations for including Asia in a global portfolio in the post-COVID world.  Our discussion is organized under four different investment themes — recovery, trend acceleration, valuation and structural drivers. 

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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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Mid-Year Liquidity Investment Outlook

Fixed Income, Liquidity, Macroeconomic, Multi Asset, Outlook, Equity

6/2020

Mid-Year Liquidity Investment Outlook The trend accelerator

The first half of 2020 saw a global liquidity event in money markets. There was a sharp widening of the spread between three-month Libor and the overnight swap rate, a metric many investors monitor. While spreads have since narrowed, stresses remain. The differing actions taken by major central banks have had an impact on how money markets have behaved.

Our response has been to build short-term liquidity in our funds by increasing the amount of assets maturing overnight and within one week. The crisis has also shown our concentration policies to be effective tools in managing liquity risk. A five per cent maximum rule for individual clients proved its worth, while we learned from previous crises which clients are more prone to redeem.

Credit risk and the preservation of capital is just as important to money market investors. Therefore, another focus is minimising the risk of credit rating migration below the minimum rating level required, which could force us to become sellers. We cannot ignore market risk either, given the spectre of ultra-low (and in more cases, negative) interest rates for the foreseeable future.

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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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Oil market risks in the spotlight

1/2020

With heightened US-Iran tensions, Brent crude prices have risen by about 3% to just above $68bbl since January 2, 2020. Perceived safe-haven assets have also rallied with gold prices edging up to levels last seen in 2013. However, prices are still within 2019's $55 - $75 range and equity markets have proven relatively resilient.

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