Investment Insights

Daily Insights

Focus of the Day

  • Trump made no tariff announcements on his first day as US president, DXY fell below 20-day moving average

Other Commentaries

  • Trump pledged major oil drilling; European stocks briefly hit a 3-month high driven by gains in tariff-sensitive sectors; HK stocks and RMB rose on China and US leaders’ phone call

Investment Analysis

Stock Markets Analysis

Stock Markets View

  • Markets were buoyed by renewed rate-cut hopes, driving a recovery in risk assets. Focus remains on potential market volatility stemming from new executive orders under the Trump administration
  • Easing inflation in major European economies supports further rate cuts by the Bank of England and the ECB, benefiting equity valuations. However, Europe’s underlying economic weakness may cap upside potential
  • Renewed expectations of US rate cuts have sparked a rebound in Asian markets. Indonesia’s rate cut to stimulate growth, along with potential easing from other ASEAN central banks, is expected to further support regional equities
  • A stronger US dollar has placed pressure on emerging market currencies in regions such as Latin America. Political uncertainties and inflation concerns in select emerging markets are likely to sustain elevated volatility
  • A potential meeting between US and Chinese leaders is boosting sentiment in Hong Kong equities. Meanwhile, China’s Q4 GDP beat expectations, with stronger retail sales and industrial production in December pointing to a continued economic recovery
Note:

Positive - Expect that the particular asset class potentially may perform well relative to the relevant major global benchmark(s) in the long run
Neutral - Expect that the particular asset class potentially may perform in line relative to the relevant major global benchmark(s) in the long run
Cautious - Expect that the particular asset class potentially may not perform well or in line relative to the relevant major global benchmark(s) in the long run

Provided by Hang Seng Investment Services Limited

Bond Markets View

  • The slowdown in US inflation data has led to a significant decline in Treasury yields, supporting sovereign debt performance. Future developments in Trump’s policies warrant close attention
  • Strong earnings from major US banks have bolstered related bond prices. Elevated yields continue to attract robust fund inflows into investment-grade debt
  • Bank Indonesia’s unexpected 25bps rate cut signals a policy pivot toward supporting economic growth, likely benefiting issuers in the region
  • Rising hopes for Fed rate cuts have spurred demand for higher-risk assets, including high-yield bonds. Market attention remains focused on the upcoming corporate earnings season in the US
  • The continued moderation in China's property price declines indicates early signs of stabilization in the housing market. Sustained improvements in sector sales could support a more stable performance in China property bonds
  • Emerging market bonds have stabilized, with moderating inflation in India fueling expectations of imminent rate cuts by the Reserve Bank of India to support growth, leading to a rebound in Indian bonds
Note:

Positive - Expect that the particular asset class potentially may perform well relative to the relevant major global benchmark(s) in the long run
Neutral - Expect that the particular asset class potentially may perform in line relative to the relevant major global benchmark(s) in the long run
Cautious - Expect that the particular asset class potentially may not perform well or in line relative to the relevant major global benchmark(s) in the long run

Provided by Hang Seng Investment Services Limited

Asset Allocation Focus

  • Bonds – In December, US core inflation eased slightly, accompanied by more dovish remarks from Fed officials, leading to a pullback in longer-dated US Treasury yields from recent highs. This week, with Trump officially taking office, the inflationary impact of his policies will be closely monitored, potentially introducing volatility to bond yields. When reviewing USD bond portfolios, note that bonds with maturities of 3-6 years are less sensitive to interest rate fluctuations
  • Equities – Heightened market expectations for Fed rate cuts this year, combined with strong earnings from major US financials, have supported a rebound in the S&P 500 from its recent 100-day moving average level of around 5,800. Year-to-date, mega-cap US tech stocks have underperformed. Equity investment strategies should remain diversified across sectors, avoiding overconcentration in high-growth tech stocks. We are constructive on dividend-paying traditional sectors, particularly financials and energy

 

Provided by Hang Seng Investment Services Limited

Investment Commentaries

第三季增持債券 審慎部署股市

Opportunities and Risks in HK Equities in 2025 (Chinese only)

GBP dip opportunities (Chinese only)

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