To get the most out of this website it's best viewed on a more up-to-date browser. See how to update your browser.

Five insights in five minutes

Five in Five: growth, NFTs, Asia credit, Europe e-commerce, Singapore
09 April 2021

    Where the growth is

    We write oodles on China. To explain why, here’s a simple calculation based on the latest economic forecasts from the IMF, released this week. Beginning with a six per cent rebound in growth this year – the strongest in four decades of data – global output is expected to rise by almost USD30 trillion over the next half decade (to USD20 trillion, in case you’re asked). Backing out the IMF’s numbers by country, mainland China is by far the biggest contributor over the period – shouldering a whopping one fifth of total growth. America is next on 15 per cent, then India with eight per cent. Meanwhile the world’s third and fourth biggest economies, Japan and Germany respectively, barely account for seven per cent of the estimated rise in output between them. So don’t feel guilty spending ten times longer reading about Chinese liquidity conditions for March (still tightish) than the stronger-than-expected housing activity in Britain. That balance is about right.

    Themes: all asset classes

    Where the growth is 

    Non-fungible tokens

    Virtual collectibles have been making headlines for their surreal sale prices. A piece by digital artist, Beeple, sold for USD69 million in a Christie’s auction last month, resembling values for Van Gogh or Basquiat masterpieces. The windfalls extend beyond digital art, with sellers cashing in on everything from tweets and memes, to sports clips and digital cats – profits made on USD300,000 cryptokitties may be as warming as real kitten cuddles. Blockchain technology authenticates these digital assets, which are traded in the form of non-fungible tokens (NFTs) based on standards that allow for open marketplaces. The market has quickly surpassed USD1 billion and garnered investor attention. Per the chart below, a basket of NFT-related technology and media stocks has tripled since the Christie’s auction. Just last week, the ‘Godzilla vs Kong’ Hollywood release was accompanied by an exclusive NFT collection. While not your parents’ collectibles, NFT adoption is set to continue as a means to monetise digital media.

    Themes: digital economy, alternative assets, global equities

    Non-fungible tokens 

    Asia credit opportunity

    In a game of rugby, it is illegal to pass the ball forwards. But even a backwards pass between running teammates will appear forwards to a stationary spectator (especially if supporting the other side). Your starting point matters in finance too. Investors in Asia ex-Japan credit who made the right call last August that spreads would continue to tighten, even after the rapid 110 basis point move post-pandemic sell-off, have been caught off-side by the rise in global rates. As you can see in the chart below, investment grade spreads have fallen another 40 basis points, however the dollar-based index return has been negative. With ten-year treasury yields struggling to break through 1.7 per cent, however, Asian credit may be close to lacing its boots again. Not only should any decline in core rates help, spreads will cheer the fact that aggregate company free cashflows relative to net debt are up by a quarter since the index peaked last year.

    Themes: Asia ex-Japan credit

    Asia credit opportunity 

    Buoyant European e-commerce

    Last year’s European equity losses from the pandemic are now behind us as the Stoxx 600 index finally surpassed its pre-covid high on Tuesday. However, whilst the stock market was reeling and output declined globally by an estimated four per cent overall, e-commerce in Europe was in fact accelerating. Western Europe retail e-commerce sales grew by a quarter in 2020 according to eMarketer’s annual report, with 30 per cent for central and eastern Europe. Though this shift in consumer behaviour to favour online rather than brick-and-mortar was of course driven by a lack of choice, a survey conducted by E-commerce Europe supports the notion that this will be a permanent feature, with all 19 contributing countries reporting a confident future outlook for e-commerce. In fact, analysts expect revenues for large names, including Shop Apotheke and ASOS, to more than double by 2026, with 22 per cent growth this year alone.

    Themes: Europe equities

    Buoyant European e-commerce 

    Singapore the financial center

    One mountain isn’t big enough to house two tigers. Yet thriving international financial centers Hong Kong and Singapore have defied this modern Chinese proverb. The former has captured more attention in recent years because of the mega IPO deals its exchange has secured with Chinese commercial giants, having raised USD50 billion last year, second only to Nasdaq’s USD60 billion. But Singapore has found its own lair in wealth management, as Asia’s Switzerland. According to BCG’s Global Wealth Report, Singapore was one of only three markets in the world managing more than one trillion dollars of cross-border wealth at the end of 2019, as the chart below indicates. Sure, Hong Kong is ahead on this metric as well, but mainly owing to ‘cross-border’ wealth coming from mainland China. And Singapore’s surrounding geography is among the fastest growing (and thus wealth accumulating) in the world. Listen to this Asian tiger roar!

    Themes: Singapore, wealth management

    Singapore the financial center 


    Important information

    For Professional Clients and intermediaries within countries and territories set out below; and for Institutional Investors and Financial Advisors in Canada and the US. This document should not be distributed to or relied upon by Retail clients/investors.

    The value of investments and the income from them can go down as well as up and investors may not get back the amount originally invested. Past performance contained in this document is not a reliable indicator of future performance whilst any forecasts, projections and simulations contained herein should not be relied upon as an indication of future results. Where overseas investments are held the rate of currency exchange may cause the value of such investments to go down as well as up. Investments in emerging markets are by their nature higher risk and potentially more volatile than those inherent in some established markets. Economies in Emerging Markets generally are heavily dependent upon international trade and, accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries and territories with which they trade. These economies also have been and may continue to be affected adversely by economic conditions in the countries and territories in which they trade. Mutual fund investments are subject to market risks, read all scheme related documents carefully.

    The contents of this document may not be reproduced or further distributed to any person or entity, whether in whole or in part, for any purpose. All non-authorised reproduction or use of this document will be the responsibility of the user and may lead to legal proceedings. The material contained in this document is for general information purposes only and does not constitute advice or a recommendation to buy or sell investments. Some of the statements contained in this document may be considered forward looking statements which provide current expectations or forecasts of future events. Such forward looking statements are not guarantees of future performance or events and involve risks and uncertainties. Actual results may differ materially from those described in such forward-looking statements as a result of various factors. We do not undertake any obligation to update the forward-looking statements contained herein, or to update the reasons why actual results could differ from those projected in the forward-looking statements. This document has no contractual value and is not by any means intended as a solicitation, nor a recommendation for the purchase or sale of any financial instrument in any jurisdiction in which such an offer is not lawful. The views and opinions expressed herein are those of HSBC Global Asset Management at the time of preparation, and are subject to change at any time. These views may not necessarily indicate current portfolios' composition. Individual portfolios managed by HSBC Global Asset Management primarily reflect individual clients' objectives, risk preferences, time horizon, and market liquidity. Foreign and emerging markets. Investments in foreign markets involve risks such as currency rate fluctuations, potential differences in accounting and taxation policies, as well as possible political, economic, and market risks. These risks are heightened for investments in emerging markets which are also subject to greater illiquidity and volatility than developed foreign markets. This commentary is for information purposes only. It is a marketing communication and does not constitute investment advice or a recommendation to any reader of this content to buy or sell investments nor should it be regarded as investment research. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

    We accept no responsibility for the accuracy and/or completeness of any third party information obtained from sources we believe to be reliable but which have not been independently verified.

    HSBC Global Asset Management is a group of companies in many countries and territories throughout the world that are engaged in investment advisory and fund management activities, which are ultimately owned by HSBC Holdings Plc. (HSBC Group). HSBC Global Asset Management is the brand name for the asset management business of HSBC Group. The above communication is distributed by the following entities:

    • In Argentina by HSBC Global Asset Management Argentina S.A., Sociedad Gerente de Fondos Comunes de Inversión, Agente de administración de productos de inversión colectiva de FCI N°1;
    • In Australia, this document is issued by HSBC Bank Australia Limited ABN 48 006 434 162, AFSL 232595, for HSBC Global Asset Management (Hong Kong) Limited ARBN 132 834 149 and HSBC Global Asset Management (UK) Limited ARBN 633 929 718. This document is for institutional investors only, and is not available for distribution to retail clients (as defined under the Corporations Act). HSBC Global Asset Management (Hong Kong) Limited and HSBC Global Asset Management (UK) Limited are exempt from the requirement to hold an Australian financial services license under the Corporations Act in respect of the financial services they provide. HSBC Global Asset Management (Hong Kong) Limited is regulated by the Securities and Futures Commission of Hong Kong under the Hong Kong laws, which differ from Australian laws. HSBC Global Asset Management (UK) Limited is regulated by the Financial Conduct Authority of the United Kingdom and, for the avoidance of doubt, includes the Financial Services Authority of the United Kingdom as it was previously known before 1 April 2013, under the laws of the United Kingdom, which differ from Australian laws.
    • in Austria by HSBC Global Asset Management (Österreich) GmbH which is regulated by the Financial Market Supervision in Austria (FMA);
    • in Bermuda by HSBC Global Asset Management (Bermuda) Limited, of 37 Front Street, Hamilton, Bermuda which is licensed to conduct investment business by the Bermuda Monetary Authority;
    • in Canada by HSBC Global Asset Management (Canada) Limited which provides its services as a dealer in all provinces of Canada except Prince Edward Island and also provides services in Northwest Territories. HSBC Global Asset Management (Canada) Limited provides its services as an advisor in all provinces of Canada except Prince Edward Island;
    • in Chile: Operations by HSBC's headquarters or other offices of this bank located abroad are not subject to Chilean inspections or regulations and are not covered by warranty of the Chilean state. Further information may be obtained about the state guarantee to deposits at your bank or on www.sbif.cl;
    • in Colombia: HSBC Bank USA NA has an authorized representative by the Superintendencia Financiera de Colombia (SFC) whereby its activities conform to the General Legal Financial System. SFC has not reviewed the information provided to the investor. This document is for the exclusive use of institutional investors in Colombia and is not for public distribution;
    • in Finland, Norway, Denmark and Sweden by HSBC Global Asset Management (France), a Portfolio Management Company authorised by the French regulatory authority AMF (no. GP99026) and through the Stockholm branch of HSBC Global Asset Management (France), regulated by the Swedish Financial Supervisory Authority (Finansinspektionen);
    • in France, Belgium, Netherlands, Luxembourg, Portugal, Greece by HSBC Global Asset Management (France), a Portfolio Management Company authorised by the French regulatory authority AMF (no. GP99026);
    • in Germany by HSBC Global Asset Management (Deutschland) GmbH which is regulated by BaFin;
    • in Hong Kong by HSBC Global Asset Management (Hong Kong) Limited, which is regulated by the Securities and Futures Commission;
    • in India by HSBC Asset Management (India) Pvt Ltd. which is regulated by the Securities and Exchange Board of India;
    • in Italy and Spain by HSBC Global Asset Management (France), a Portfolio Management Company authorised by the French regulatory authority AMF (no. GP99026) and through the Italian and Spanish branches of HSBC Global Asset Management (France), regulated respectively by Banca d’Italia and Commissione Nazionale per le Società e la Borsa (Consob) in Italy, and the Comisión Nacional del Mercado de Valores (CNMV) in Spain;
    • in Mexico by HSBC Global Asset Management (Mexico), SA de CV, Sociedad Operadora de Fondos de Inversión, Grupo Financiero HSBC which is regulated by Comisión Nacional Bancaria y de Valores;
    • in the United Arab Emirates, Qatar, Bahrain & Kuwait by HSBC Bank Middle East Limited which are regulated by relevant local Central Banks for the purpose of this promotion and lead regulated by the Dubai Financial Services Authority.
    • in Oman by HSBC Bank Oman S.A.O.G regulated by Central Bank of Oman and Capital Market Authority of Oman;
    • in Peru: HSBC Bank USA NA has an authorized representative by the Superintendencia de Banca y Seguros in Perú whereby its activities conform to the General Legal Financial System - Law No. 26702. Funds have not been registered before the Superintendencia del Mercado de Valores (SMV) and are being placed by means of a private offer. SMV has not reviewed the information provided to the investor. This document is for the exclusive use of institutional investors in Perú and is not for public distribution;
    • in Singapore by HSBC Global Asset Management (Singapore) Limited, which is regulated by the Monetary Authority of Singapore;
    • in Switzerland by HSBC Global Asset Management (Switzerland) AG whose activities are regulated in Switzerland and which activities are, where applicable, duly authorised by the Swiss Financial Market Supervisory Authority. Intended exclusively towards qualified investors in the meaning of Art. 10 para 3, 3bis and 3ter of the Federal Collective Investment Schemes Act (CISA);
    • in Taiwan by HSBC Global Asset Management (Taiwan) Limited which is regulated by the Financial Supervisory Commission R.O.C. (Taiwan);
    • in the UK by HSBC Global Asset Management (UK) Limited, which is authorised and regulated by the Financial Conduct Authority;
    • and in the US by HSBC Global Asset Management (USA) Inc. which is an investment adviser registered with the US Securities and Exchange Commission.

    INVESTMENT PRODUCTS:

    • Are not a deposit or other obligation of the bank or any of its affiliates;
    • Not FDIC insured or insured by any federal government agency of the United States;
    • Not guaranteed by the bank or any of its affiliates; and
    • Are subject to investment risk, including possible loss of principal invested.

    Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided as an "as is" basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively 'the MSCI Parties') expressly disclaims all warranties (including, without limitation, all warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.msci.com)

    Copyright © HSBC Global Asset Management Limited 2021. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Global Asset Management Limited.