Investment Insights

Daily Insights

Focus of the Day

  • Markets watch the impact of metal price rebound on global inflation

Other Commentaries

  • China’s Nov LPR unchanged, and markets expect possible RRR cut by PBOC; UK Oct inflation drops more than expected, lowering rate cut chances this year; Germany’s 4Q24 economy likely to struggle for growth

Investment Analysis

Stock Markets Analysis

Stock Markets View

  • Fed Chair Powell indicated robust economic performance, suggesting no immediate urgency to cut interest rates. Consequently, the likelihood of a December rate cut has diminished, leading to a pullback in the S&P 500 after briefly reaching the 6,000 mark
  • While slowing inflation and economic deceleration in Europe may support further rate cuts by the European Central Bank, concerns regarding potential dampening effects on corporate earnings growth are prevalent. As a result, European stocks are expected to continue consolidating
  • While trade policy concerns may weigh on Asian economies in the short term, strong demand stemming from a resilient US economy is expected to benefit regional manufacturing, particularly in ASEAN countries
  • The recent strength of the US dollar, coupled with declining commodity prices, has negatively impacted the performance of emerging markets in Latin America, including Brazil and Mexico
  • October retail sales growth in mainland China accelerated, signaling an improvement in domestic consumption. Additionally, the China Securities Regulatory Commission's push for A-share companies to enhance market capitalisation management could bolster the performance of large H-shares
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

  • Fed Chair Powell has indicated no urgency to cut interest rates, leading to a decreased probability of a December rate cut. US Treasury yields continued to rise, contributing to short-term volatility in sovereign bonds
  • With weakening economic momentum in the Eurozone and inflation expected to meet targets, the market anticipates a 25 basis point cut from the European Central Bank in December, which is likely to support the performance of Eurozone investment-grade bonds
  • While there are signs of improvement in the Chinese property market and potential for additional fiscal stimulus, Asian investment-grade bond spreads remain stable at low levels
  • Investor optimism is waning, compounded by increased new issuance pressuring the US high-yield bond market. However, an anticipated soft landing for the economy may help maintain tight credit spreads
  • The effectiveness of China’s measures to stabilise property market may take time to emerge. Overall, Chinese property bonds continued to retract earlier gains, with market focused on the sustainability of improvements in residential sales
  • A strong US dollar and diminished expectations for US rate cuts are unfavorable for emerging market debt. Additionally, increased risks of a downgrade in Mexico's credit rating poses challenges for related sovereign bond performance
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 – US inflation for October met market expectations, although there is growing concern regarding how the future policies of the Trump administration may influence the interest rate environment. Fed Chair Powell has indicated there is no rush to cut rates. As a result, US Treasury yields have recently risen, yet data continues to reflect stable economic growth. Income-focused investors should consider medium- to long-tenor investment-grade corporate bonds to lock in yields
  • Equities – Expectations for a rate cut in the US have cooled, compounded by Trump's appointment of hawkish figures to key government positions, putting pressure on global equity markets. Nevertheless, the resilience of the US economy, coupled with ongoing structural improvements in Asian economies, suggests that global economic impacts from policy shifts are likely to remain contained. Market corrections could present opportunities for long-term investors. A balanced approach between equities and bonds, along with diversification across regions and sectors, is recommended to manage the risks associated with increased volatility

Provided by Hang Seng Investment Services Limited

Investment Commentaries

第三季增持債券 審慎部署股市

Driven by stimulus, funds are flowing into HK stock market (Chinese only)

What's the impact of Trump's return to the White House on Investment Markets (Chinese only)

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