Markets will be volatile over coming weeks and months, but this should be viewed as an opportunity not a threat, says HSBC Private Bank.
“Despondency is [the] point of maximum opportunity, in our view,” the bank says in an investment note in which it highlights the allure of the US equity market. “In addition to the relatively healthy domestic economy, we like US equities because there are a number of large-cap multinationals with strong balance sheets and the ability to tap into the vein of emerging market growth,” says Willem Sels, UK head of investment strategy at HSBC Private Bank.
The UK private bank also views emerging market equities as attractive, as they are relatively cheap after a period of underperformance.
Despite greater volatility relative to developed market stocks, HSBC believes that they can deliver better risk-adjusted returns as their valuation discount unwinds in the next 12 months. The bank singles out China, Russia, Brazil, Indonesia and Malaysia as the markets with the greatest potential.