The firm is generally overweight equities – with exceptions to certain countries' stocks – mildly negative on fixed income, and likes hedge funds and gold, with core exposures to areas such as infrastructure and private markets. We speak to its chief investment officer.

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 HSBC Global Private Banking's global chief investment officer, Willem Sels. He spoke alongside Cheuk Wan Fan, Asia CIO.

The bank likes industrials and healthcare stocks, among others, Sels continued. HSBC also holds hedge funds and gold to spread risk. 

In its presentation to journalists, HSBC warned against clients holding excess cash, because this will be a drag on perfornance; it expects equities to outperform bonds; cyclical and defensive stocks should be balanced for diversification; leading domestic Asian equities should be held to guard against concerns about tariffs, and there are opportunities to be found in hedge funds, private markets, and infrastructure.

The bank is underweight cash, and mildly underweight fixed income, such as Japanese government bonds. It is mildly overweight equities, such as on the US, UK, Japan, India and Singapore markets, while underweight Europe ex-UK, emerging markets, Europe, Middle East and Africa, and Latin America. It is overweight hedge funds and gold, and has core allocations to private markets and infrastructure.

A theme from the bank that is echoed by a number of its peers, such as BNP Paribas (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 [asset allocation vs benchmark]…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.