Widen Investment Horizons To Get Diversified – HSBC Private Banking

Editorial Staff

3 December 2024

HSBC Private Banking’s enthusiasm for US equities hasn’t waned but the organisation is widening the type of stocks it holds beyond the “Magnificent Seven” large tech players such as Nvidia, Amazon and Apple.

And the private bank notes that with interest rates trending off their recent highs – as seen with a cluster of central bank cuts – “cash is not the base to be,” as explained in a briefing by (an interview is forthcoming with that bank) is a desire to diversify to a wider range of US equities, going beyond areas such as Big Techs. After the gains to markets for much of this year, wealth managers are working out how to capture more gains while protecting against the downside. The MSCI World Index of developed countries' stocks shows total returns (capital plus reinvested dividends, in US dollars) of 19.5 per cent.

Sels said that adopting a thematic approach to investing tends to encourage a wider risk of equity holdings.

HSBC Private Banking sees more dollar strength against the euro, citing sluggish growth and eurozone interest rate expectations, and sees the dollar/euro rate at 99 cents by the middle of 2025. Investment and capital flows into the US economy will support the greenback, Sels said.

“The US is our biggest overweight …mainly because of its resilient economy and having the largest opportunity set,” Sels continued. “The private bank is looking for opportunities that go beyond technology."

Asked about geopolitical uncertainties, Sels said that markets tend to be affected more by underlying economics rather than the vagaries of politics and conflict, although the largest example of a geopolitical impact was Russia’s invasion of Ukraine in 2022.

In other predictions and positions, Sels said the bank expects the Swiss franc to remain strong against the euro, and weaken a touch against a strong dollar.

When asked by this news service about the election of Donald Trump to the US presidency and his nomination of vaccine sceptic and foe of Big Pharma, Robert F Kennedy Jnr for the health secretary spot in the cabinet, Sels said clients will watch what the Trump administration actually does, and that is why HSBC is so diversified in its investments.

While the Kennedy nomination creates uncertainties, North American healthcare benefits from innovations in medicines and technologies that propel the sector, he added.