No global recession before 2021, says HSBC

Business | Tereza Cai 11 Jul 2019

HSBC Global Asset Management said the global economy is unlikely to suffer from a recession before 2021, despite an economic growth slowdown.

Investors around the world are overly pessimistic, as a combination of reasonable global growth, solid corporate fundamentals and supportive monetary policy means that the risk of a recession looks more likely in 2021 or beyond, said Bill Maldonado, chief investment officer Asia-Pacific, and global chief investment officer of equities at HSBC Global Asset Management.

Maldonado says it favors risk assets and equities. "Among emerging markets, Asia stands out while other markets grapple with market uncertainties. Asia equities ex Japan are trading at an attractive discount compared with the US market at present."

As for fixed income assets, Alfred Mui, head of Asian credit, said that Asian credit is well equipped with technical improvement and solid fundamentals, which should be able to help this asset class weather market uncertainties.

Asset management firm LW Group, meanwhile, said the possibility of a financial crisis within a year is over 30 percent, and it expects the US Fed to cut interest rates twice, in September and December, by a total of 50 basis points.

Andy Wong, chief investment strategist at LW, sees the Hang Seng Index in a range of 26,600 to 30,280, and forecasts the gold price will rise above US$2,000 (HK$15,600) per ounce in the next two years.


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