Q2 2025 Investment Outlook – Investors need to innovate in fast-paced world
The report, Innovate or Stagnate, sets out how increased trade frictions and rapid AI-led innovation are among the major changes that are challenging markets, so high net worth and ultra high net worth clients need to adapt quickly to this fast-evolving world.
In Q1, the bank upgraded its outlook for Chinese stocks to positive and raised its allocation to eurozone equities to neutral. It maintains its medium-term optimism in the US but diversifies across countries and sectors as opportunities spread. It further diversifies its portfolio strategy to address tail risks through high-quality bonds, hedge funds and gold.
Its four priorities going into Q2 2025 are:
Global AI adopters and electrification: Technology-driven earnings growth is moving from AI enablers to AI adopters. Rising energy consumption is driving investments in electricity generation capacity and the electric grid.
Multi-asset and active fixed income strategies: Diversification across asset classes, geographies and sectors offer global opportunities for improved risk-adjusted returns. The busy news flow lends itself to active managers.
Private markets and hedge funds: Private equity is well placed to benefit from M&A, and the AI boom will help smaller firms compete with established public market peers. Hedge funds can exploit volatility and relative value opportunities.
Domestic resilience in an evolving Asia: Asia's diverse markets present a broad range of opportunities, particularly in Indian, Singapore and Japanese stocks. Chinese stocks should benefit from AI-led innovation and reduced regulatory risks.
Willem Sels, Global Chief Investment Officer at HSBC Global Private Banking and Wealth, said: 'While the global economy is facing challenges, it remains resilient as government and corporate spending is supporting economic activity, while innovation in AI is boosting productivity. Global central banks are also assisting by maintaining a monetary easing bias. The underperformance of the US in the year to date can at least in part be attributed to increased optimism in other countries and opportunities outside the tech sector.'
Georgios Leontaris, Chief Investment Officer, Switzerland and EMEA, HSBC Global Private Banking and Wealth, said: ' Exceptionalism has often been associated with the US economy in recent years, however the same characterisation can be made about the non-oil economy in GCC countries, which is up almost 20% compared to pre-COVID levels led by strength in Saudi Arabia and UAE. Solid fundamentals and ample sovereign wealth buffers provide a cushion against external uncertainties. Structural reforms and multi-year investment programmes in infrastructure, technology and hospitality remain visible. We have recently upgraded our view on UAE equities as part of our drive to broaden geographical diversification, with undemanding P/E multiples offering a good entry point for international investors.'
-Ends-
Media enquiries
Ahmad Othman
ahmadothman@hsbc.com
Darren Lazarus
darren.lazarus@hsbc.com
About HSBC Global Private Banking
HSBC Global Private Banking helps clients manage, grow and preserve their wealth for generations to come. Its network of global experts helps clients access investment opportunities around the world, plan for the future with wealth and succession planning, manage their portfolio with tailored solutions, and find the right support for their philanthropy. www.privatebanking.hsbc.com
About HSBC in the MENAT region
HSBC is the largest and most widely represented international banking organisation in the Middle East, North Africa and Türkiye (MENAT), with a presence in nine countries across the region: Algeria, Bahrain, Egypt, Kuwait, Oman, Qatar, Saudi Arabia, Türkiye and the United Arab Emirates. In Saudi Arabia, HSBC is a 31% shareholder of Saudi Awwal Bank (SAB), and a 51% shareholder of HSBC Saudi Arabia for investment banking in the Kingdom. Across MENAT, HSBC had assets of US$73bn as at 31 December 2024.
www.hsbc.ae
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Zawya
an hour ago
- Zawya
Chinese refiners sweep up Russian oil after Indian demand falls, analysts say
Chinese refineries have purchased 15 cargoes of Russian oil for October and November delivery as Indian demand for Moscow's exports falls away, two analysts and one trader said on Tuesday. India has emerged as the leading buyer of Russian seaborne oil, which has sold at a discount since some Western nations shunned purchases and imposed restrictions on Russian exports over Moscow's 2022 invasion of Ukraine. Indian state refiners paused Russian oil purchases last month, however, as those discounts narrowed. And U.S. President Donald Trump is also threatening to punish countries for buying Russian crude. China had secured 15 Russian Urals cargoes for October–November delivery by the end of last week, said Richard Jones, a Singapore-based crude analyst at Energy Aspects. Each Urals cargo ranges in size from 700,000 to 1 million barrels. Kpler senior analyst Xu Muyu wrote in an August 14 report that China has likely purchased about 13 cargoes of Urals and Varandey crude for October delivery, along with at least two Urals cargoes for November. The additional Russian Urals supply could curb Chinese refiners' appetite for Middle Eastern crude, which is $2 to $3 per barrel more expensive, Xu said. This, in turn, could add further pressure to the Dubai market which is already losing momentum as seasonal demand fades while competition from arbitrage supply intensifies, she added. A trade source agreed with Kpler's estimate, adding that the cargoes were booked mostly at the beginning of this month by Chinese state-owned and independent refineries. China, the world's top oil importer and largest Russian oil buyer, primarily buys ESPO crude exported from the Russian Far East port of Kozmino due to its proximity. Its year-to-date imports of Urals crude stood at 50,000 barrels per day, Kpler data showed. Urals and Varandey crude are typically shipped to India, Kpler data showed. Indian state-refiners have backed out Russian crude imports by approximately 600,000 to 700,000 bpd, according to Energy Aspects' Jones. "We do not expect China to absorb all of the additional Russian volumes, as Urals is not a baseload grade for Chinese majors," he said, referring to Chinese state refineries which are not designed to solely process the Russian grade. Chinese refiners will also be wary about the possibility of U.S. secondary sanctions if Trump's push for a Ukraine peace deal breaks down, he added. Trump said on Friday he did not immediately need to consider retaliatory tariffs on countries such as China for buying Russian oil but might have to "in two or three weeks". (Reporting by Siyi Liu in Singapore; Editing by Florence Tan and Joe Bavier)
Zawya
an hour ago
- Zawya
Euro zone bonds struggle for direction after Ukraine talks, eyes on Jackson Hole
Euro zone government bonds were in a holding pattern on Tuesday as traders looked ahead to a symposium of global central bankers later in the week, and after talks in Washington on ending Russia's war in Ukraine. NATO Secretary General Mark Rutte told Fox News on Monday that U.S. President Donald Trump's meeting with Ukrainian President Volodymyr Zelenskiy and other European and NATO partners had been very successful. In a social media post late on Monday, Trump said he had called Russian President Vladimir Putin and begun arranging a meeting between Putin and Zelenskiy, to be followed by a trilateral summit among the three presidents. However, questions remain on security guarantees and whether a ceasefire or peace agreement is the best way forward. Germany's 10-year bond yield, the euro zone benchmark, was down about 1 basis point (bp) at 2.763%. It hit a 4-1/2 month high of 2.787% on Monday. Yields move inversely with prices. Germany's two-year yield, which is sensitive to changes in interest rate expectations, was steady at 1.968%. "The easy explanation for the inactivity in the market today is that we don't know about progress in the Ukraine talks," said René Albrecht, analyst at DZ Bank. "The next issue is monetary policy in the U.S. and the discussion about whether the Fed is going to cut in September or not." Federal Reserve Chair Jerome Powell is due to speak at the Kansas City Fed's annual symposium in Jackson Hole, as money market traders stick with their bets for a rate cut next month. Futures imply around an 85% chance of a quarter-point rate cut at September 16-17 meeting, little changed from the day before. The Fed's policy rate has been in the 4.25%-4.50% range since December. The size and importance of the U.S. economy means changes in Fed rate expectations often influence European and other bond markets. Expectations for European Central Bank interest rates remain well-anchored in the near term, with markets expecting the central bank to remain on hold in September. Italy's 10-year bond yield was down 1 bp at 3.584%, keeping the spread between Italian and German 10-year yields unchanged at 82 bps. The gap between Italian and French 10-year yields continues to narrow, last at about 13.5 bps. "(Italian Prime Minister Giorgia) Meloni has brought calm back to Italian politics and the path of the budget is in line with EU norms," DZ Bank's Albrecht said. "France is totally different. You have a risk in Paris that the National Assembly fires the prime minister and then you have the political instability issue again." France's Prime Minister Francois Bayrou unveiled his 2026 budget plan in July that included almost 44 billion euros ($51.39 billion) of cuts. The budget is likely to draw resistance from opposition Socialist lawmakers when parliament returns from recess next month, putting Bayrou's government at risk of being toppled. ($1 = 0.8562 euros)
Khaleej Times
2 hours ago
- Khaleej Times
Chinese refiners sweep up Russian oil after Indian demand falls, analysts say
Chinese refineries have purchased 15 cargoes of Russian oil for October and November delivery as Indian demand for Moscow's exports falls away, two analysts and one trader said on Tuesday. India has emerged as the leading buyer of Russian seaborne oil, which has sold at a discount since some Western nations shunned purchases and imposed restrictions on Russian exports over Moscow's 2022 invasion of Ukraine. Indian state refiners paused Russian oil purchases last month, however, as those discounts narrowed. And U.S. President Donald Trump is also threatening to punish countries for buying Russian crude. China had secured 15 Russian Urals cargoes for October–November delivery by the end of last week, said Richard Jones, a Singapore-based crude analyst at Energy Aspects. Each Urals cargo ranges in size from 700,000 to 1 million barrels. Kpler senior analyst Xu Muyu wrote in an August 14 report that China has likely purchased about 13 cargoes of Urals and Varandey crude for October delivery, along with at least two Urals cargoes for November. The additional Russian Urals supply could curb Chinese refiners' appetite for Middle Eastern crude, which is $2 to $3 per barrel more expensive, Xu said. This, in turn, could add further pressure to the Dubai market which is already losing momentum as seasonal demand fades while competition from arbitrage supply intensifies, she added. A trade source agreed with Kpler's estimate, adding that the cargoes were booked mostly at the beginning of this month by Chinese state-owned and independent refineries. China, the world's top oil importer and largest Russian oil buyer, primarily buys ESPO crude exported from the Russian Far East port of Kozmino due to its proximity. Its year-to-date imports of Urals crude stood at 50,000 barrels per day, Kpler data showed. Urals and Varandey crude are typically shipped to India, Kpler data showed. Indian state-refiners have backed out Russian crude imports by approximately 600,000 to 700,000 bpd, according to Energy Aspects' Jones. "We do not expect China to absorb all of the additional Russian volumes, as Urals is not a baseload grade for Chinese majors," he said, referring to Chinese state refineries which are not designed to solely process the Russian grade. Chinese refiners will also be wary about the possibility of U.S. secondary sanctions if Trump's push for a Ukraine peace deal breaks down, he added. Trump said on Friday he did not immediately need to consider retaliatory tariffs on countries such as China for buying Russian oil but might have to "in two or three weeks".
