Investment managers at HSBC Global Private Banking and German asset manager DWS discuss the global investment outlook in 2024, highlighting how investors can take advantage of attractive yields in bond and private credit markets and power returns in equity markets, notably in India. 

HSBC Global Private Banking believes that there is likely to be a richer set of investment opportunities for high net worth and ultra-high net worth clients in the second half of 2024, despite uncertainties over global elections and central bank rate decisions.

In its investment outlook for the third quarter of 2024, HSBC outlines four investment opportunities. It thinks that the improvement in economic data should support companies’ earnings' growth across more geographies and sectors. It maintains its global equity overweight which is its biggest overweight position, and has broadened its sector exposure, saying that equity investors can capture more opportunities and diversify, while addressing concerns about the rich valuations in the tech sector. In developed markets, the bank maintains the US as its principal overweight position but also see opportunities in Europe, and has upgraded Japan to mildly overweight.

HSBC also highlighted how bond yields are currently near decade-high levels, and an allocation to bonds and multi-asset strategies can help generate a stable income stream, while providing portfolio diversification for tail risk events. It maintains its overweight position in fixed income, with a preference for Treasuries and investment grade corporate bonds over high yield.

In addition, HSBC sees structural opportunities in infrastructure, private assets and in its investment themes. The bank likes the fact that strong demand in infrastructure is driven by structural global trends of decarbonisation, digitalisation and re-onshoring, while returns are often linked to inflation.

Asia
HSBC believes that Asia’s economic and earnings' growth continue to far exceed the global average, with projected 4.6 per cent GDP growth and 23 per cent earnings' growth in 2024. According to the International Monetary Fund's recent World Economic Outlook, India surpassed the UK as the world’s fifth largest economy in 2022 and is expected to overtake Japan and Germany by 2027/2028.

“We maintain our overweight positions in Japan, India and South Korea, where we see the best opportunities to tap into Asia’s structural growth themes. In Mainland China and Hong Kong, more decisive policy stimulus and capital market reforms bring tactical opportunities for undervalued quality stocks,” Willem Sels, global chief investment officer at HSBC Global Private Banking and Wealth, said in a note this week.

“We find promising secular growth opportunities in India and ASEAN, riding on the secular tailwinds from the young demographics, rising middle-class consumers, robust foreign direct investment (FDI) and domestic investment spending, technological innovation and green transformation,” Sels continued.

“Asia remains the most important growth engine of the global economy, and we find promising and diverse opportunities from the corporate governance reforms, supply chain revamp, manufacturing upgrading and robust consumption,” Cheuk Wan Fan, chief investment officer for Asia at HSBC Global Private Banking and Wealth, added.

They are not alone in their views. Although DWS remains neutral on emerging market equities, Björn Jesch, global chief investment officer at DWS, believes that India will remain the growth champion in Asia.

“Although the valuation level of the Indian stock market is high, it currently offers more opportunities than the Chinese market. Elections in India are expected to turn out friendly to markets. Chinese stocks are still burdened by the frequently low profitability of corporations,” Jesch said in a note this week.

A number of fund managers, such as Ocean Dial and Franklin Templeton, have told this publication about why they see India as an attractive investment destination for global and domestic investors. See more commentary here and here.

Jesch is cautiously optimistic for both bonds and equities in 2024. He also noted that the recent fall in the gold price is consistent with lower expectations of the US Federal Reserve cutting rates pretty soon. “Investor interest could rise again as soon as the Fed’s rate policy path is getting clearer. Demand from central banks and private investors for physical gold is expected to remain high and support the gold prices in the medium run,” he added.

Sustainabililty
HSBC also highlighted how investment in sustainability continues to present opportunities around the globe, with Europe and Asia taking the lead. China leads the world in energy storage and last year it built on its lead to now represent 42.7 per cent of global storage capacity. In Europe, carbon pricing reforms are starting to progress and it is expected that industrials there will have to start to really weigh up the cost of carbon production and seek cleaner methods of production. Biodiversity and the circular economy are also in focus in the US, HSBC added.