HSBC – the private bank with a truly global perspective
As part of the HSBC Group, one of the world’s largest banking and financial services organisations, HSBC Private Banking is in a prime position to provide High-Net-Worth Individuals (HNWI), Ultra-High-Net-Worth Individuals (UHNWI) and Family Office clients with unparalleled market insights and strategically tailored investment solutions.
Cheuk Wan Fan, HSBC Private Banking managing director, head of Investment Strategy and Advisory, Asia says underpinned by a global network of experienced analysts and investment specialists spanning the world, HSBC Private Banking is able to identify new trends and opportunities to help clients shape their investment strategies. “Spanning the globe, our Global Investment Committee monitors markets to identify cycles, tactical trends and investment opportunities to provide our private banking clients with bespoke solutions to achieve their investment objectives,” says Fan who emphasises a key objective of HSBC's advice and services proposition is to help clients to build a globally diversified core investment portfolio based on active risk management. “Global diversification using a balanced portfolio strategy is crucial to enable investors to benefit from stable returns with controlled risk,” says Fan who notes a growing appreciation among high-net-worth investors in Asia for the need to diversify their investments instead of mainly focusing on a home or regional market investment bias, where they could be exposed to local concentration risk. To help clients HSBC's experienced strategists and asset class-focused specialists, part of HSBC’s well established global capabilities network, identify tactical asset allocation opportunities and High Conviction Themes, based on thorough market research. Fan says through HSBC Private Banking’s global footprint of investment specialists, covering a wide spectrum of assets classes, the bank is able to provide sophisticated and customised advice and investment solutions that high-net-worth clients require.
"Global diversification using a balanced portfolio strategy is crucial to enable investors to benefit from stable returns with controlled risk Strategic strengths" - Cheuk Wan Fan, HSBC Private Banking managing, director, head of Investment, Strategy and Advisory, Asia
Explaining how diversifying asset allocation is a cornerstone of a successful long-term, actively risk managed investment strategy, Fan stresses that managing risk, does not mean being un-invested. “It’s asset allocation, not the market timing, that’s important,” says Fan, referring to a tendency for some investors to strategically attempt to time market entry and exit points. According to Fan, the 2008 global financial crisis is a classic example of what can happen when investors that withdraw from the markets and wait on the sidelines. “Many missed opportunities to reap rewards as quantitative easing and large-scale intervention from central banks fueled a market rise,” says Fan.
To provide clients with round-the-clock comprehensive market information, in June, HSBC Private Banking made online access of its HSBC’s Knowledge & Research Centre service available to clients. “The new capability will provide eligible clients with access to our digital investment research hub that offers a wide range of investment resources produced by our Private Banking investment specialists, HSBC Global Research and industry partners. Clients are offered access to our in-depth asset class analysis and thematic research to help them make better informed investment decisions,” Fan says.
In addition, HSBC Private Banking’s Managed Investment Solutions is another key initiative designed to help clients meet the rising need to diversify and build their core holding through actively managed discretionary solutions, high-conviction long-only funds and hedge funds. “Our relationship managers and investment counsellors work closely with our clients to understand their investment needs and build solutions to match their return objectives and risk appetite by constructing globally diversified portfolios with various asset classes such as discretionary solutions, long-only funds, alternative investments, commodities, single-line equities and bonds,” says Fan.
Fan says a defining characteristic of HSBC Private Banking proposition is the ability to provide a full spectrum of solutions across a wide range asset classes. For example, in addition to equities, fixed income, commodities and foreign exchange, HSBC Private Banking works closely with clients to offer tailor-made alternative solutions such as private equity, private credit, hedge funds and real estate investment.” Alternative investment is an important asset class for investors seeking to diversify their portfolios while generating un-correlated returns,” Fan explains. “Our relationship managers and investment counsellors draw directly on these unique insights to make bespoke recommendations to enable our clients to shape their investment strategies,” she says.
Another key strength is HSBC’s risk-managed discretionary investment services which may enable clients to benefit from investment opportunities that would be difficult to access and maintain as an individual investor. “Our investment managers create portfolios across all asset classes and investment styles customised to the individual needs of our clients,” says Fan who adds that HSBC’s global footprint ensures there are analysts in multiple locations with the ability to identify local themes. Fan says HSBC High Conviction Themes target opportunities associated with specific trends identified by HSBC strategists that add attractive diversification elements to a portfolio, while aiming at enhancing returns, which reduces overall risk.
Second half 2017 outlook
Having reached the 2017 mid-year point, Fan says concerns held during the early part of the year relating to the implication of a possible US-China trade war, elections in EU countries and higher interest rates have markedly subsided. She also notes how the outcome of the bilateral talks between Donald Trump, the US president, and Xi Jinping, his Chinese counterpart seem to indicate a move towards negotiation over trade differences. At the same time, Fan also notes the election of Emmanuel Macron, as the President of France is likely to bring a sustainable stabilising effect across Europe. “As a result of reduced geopolitical tensions there has been a noticeable increase in positive investor sentiment,” says Fan who adds for the first time since the 2008 global financial crises there is a synchronised growth recovery in both developed and emerging markets. However, Fan points out that uncertainty remains over the US tax reform plans, fiscal stimulus and investment in infrastructure. Fan says a lack of clarity surrounding the US president’s proposals combined with subdued US wage inflation, leads to HSBC economists’ prediction that the Federal Reserve will continue to take a prudent approach to future increase in interest rates. Meanwhile, on the back of a weakening US dollar, HSBC economists predict improved political stability in Europe will support global growth recovery cycles and raise overall appetite for risk. Synchronised global growth, according to Fan, will particularly benefit emerging market and Asian assets. In a softer US dollar environment, HSBC fixed income strategists expect US 10-year US treasury yield to decline to 1.9 per cent by the end of the year. “With the US dollar expected to weaken, we have become more positive on the Euro and Yen,” says Fan who expects in low yield investment environment, the global demand for yield enhancing solutions will remain high.
In Asia, Fan says HSBC sees opportunities based on structural growth in China and India. “Both countries have a fast growing middle-class consumer market,” Fan says. Despite the slowdown in China, the drive to rebalance the economy through technology and innovation is viewed as promising long-term benefits. “We expect China GDP growth to stay at 6.7 per cent this year and next year,” says Fan adding at this level investment opportunities will continue to rise. Fan says China's continuing shift away from labour-intensive low-end manufacturing towards highend technology driven industry creates opportunities for investors, especially in the IT, new energy, media, financial services, tourism, education services, consumer discretionary and healthcare sectors. “The new economy sectors that we favour for services and consumer products will drive more sustainable growth for investors with the potential to generate alpha,” notes Fan.
Investments in emerging markets may be extremely volatile and subject to sudden fluctuations of varying magnitude due to a wide range of direct and indirect influences. Such characteristics can lead to considerable losses being incurred by those exposed to such markets.
This article is not a personalised communication from HSBC to you and does not constitute and should not be construed as legal, tax or investment advice or a solicitation of the sale or recommendation of any product or service. You should not make any investment decisions based mainly or solely on this article. All investments involve risks and may experience upward or downward movements and may even become valueless.
Issued by The Hongkong and Shanghai Banking Corporation Limited.