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Governments across Asia are planning their paths to net zero, with many Asian corporates following suit… This opens up a unique opportunity for global investors to take part in Asia’s transformation through an ESG enhanced Asian bond strategy, which also offers potentially higher yields versus other comparable markets.
Why invest in Asia ESG bonds?
Net zero targets have been announced across Asia
Governments across Asia have announced net zero and emission reduction targets, which in turn should support ESG improvement trajectory of individual Asian bond issuers
Emission reduction commitments have already been set by a number of Asian corporates, with targets falling in line with a 2C or the even lower 1.5C climate scenario
China’s five-year plan – climate related targets for 2025
Reduce carbon intensity by 18% from 2020 levels
Increase forest coverage to 24.1%
Reduce energy intensity by 13.5% from 2020 levels
Increase share of non-fossil sources in the energy mix to around 20%
Source: Government announcements, November 2021.
Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Asset Management accepts no liability for any failure to meet such forecasts, projections or targets. For illustrative purposes only.
Growth in Asia’s sustainable bond issuance
Asia issued a record amount of green, social and sustainability-linked US dollar bonds in 2021
Various climate related commitments made by Asian sovereigns and corporates require funding and should thus drive increased and more diversified issuance of sustainable bonds
Record year in Asia USD sustainable bond supply
Labelled bond issuance includes green, social, sustainability, sustainability-linked and pandemic bonds.
Source: HSBC Global Research, Bloomberg, April 2022. Past performance is not indicative of future performance. For illustrative purpose only.
Optimising return potential while achieving ESG objectives
Historical evidence suggests that investing in Asia ESG bonds does not come at the expense of performance
At the same time, the sustainability characteristics of an Asia ESG bond index are stronger than a conventional Asia bond index
Performance of Asia bond ESG and non-ESG index historically
Carbon intensity is measured by tonnes of CO2e/US$M sales. Source: JACI ESG refers to JPMorgan ESG Asia Credit Index, and JACI refers to JPMorgan Asia Credit Index. Source: JPMorgan, data as of 5 November 2021.
Why HSBC Asset Management’s Asia ESG bond strategy?
HSBC Asset Management’s awards include Best of the Best Awards for Asian Bond House category by Asia Asset Management 2015, 2016, 2017, 2018, 2020, 2021, according to Asia Asset Management as of February 2021. HSBC Asset Management was awarded “ESG Advanced” by Morningstar, among the industry’s strongest ESG proponents; out of 140 strategies and 34 asset managers assessed by Morningstar only five asset managers earned a Morningstar ESG Commitment Level of Advanced; source is Morningstar as of June 2021. Source: HSBC Asset Management, December 2021. The characteristics may differ by product, client mandate or market conditions. Information may be changed from time to time without notice. For illustrative purpose only. There is no guarantee that these investment strategies and process will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. Socially responsible investing is qualitative and subjective by nature, and there is no guarantee that the criteria utilized, or judgment exercised, by HSBC will reflect the beliefs or values of any one particular investor. Socially responsible norms differ by region. There is no assurance that the socially responsible investing strategy and techniques employed will be successful. Past performance is not a guarantee or reliable indicator of future results.
The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested. Past performance is not a reliable indicator of future performance. Any views and opinions expressed are subject to change without notice. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. We accept no liability for any failure to meet such forecast, projection or target. This page is prepared for general information purposes only and does not have any regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive it. Any views and opinions expressed are subject to change without notice. This document does not constitute an offering document and should not be construed as a recommendation, an offer to sell or the solicitation of an offer to purchase or subscribe to any investment.
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Terms and conditions
This Site is intended for Institutional Investors in Hong Kong only.
Important information
The Funds invest in various investments, such as equities, bonds, money market instruments, collective investment schemes and alternative investments. Each fund has a different investment objective and risk profile.
The Funds may subject to the risks of investing in emerging markets and smaller companies; and may subject to the concentration risks when the investments are concentrated in one or a small number of markets or sectors.
The Funds may invest in non-investment grade bonds, unrated bonds, contingent convertible securities, mortgage backed securities, asset backed securities and urban investment bonds issued by PRC local government financing vehicles (LGFVs) which are subject to additional risks and volatility.
The Funds may have substantial investments in securities issued by a single sovereign issuer (including but not limited to issuer with a non-investment grade credit rating) and are subject to higher concentration risk, sovereign risk and credit risk.
The Funds may gain exposure to hedge fund, absolute return strategy, private equity, real estate sector and Real Estate Investment Trust (REIT) which are subject to additional risks and volatility.
The Funds may invest in onshore Chinese securities through various market access schemes and China A-shares Access Products. Such investments involve additional risks, including the risks associated with China's tax rules and practices.
When investing in Indian bonds, the Funds may need to comply with the licensing regulations in India and may subject to additional risks, including quota restrictions and tax risks.
The Funds may invest in other funds and need to bear the underlying funds' fees and expenses on top of the Funds' own fees and expenses.
The Funds may invest in financial derivative instruments for investment purpose which may lead to higher volatility to their net asset value.
The Funds may pay dividends out of capital or gross of expenses. Dividend is not guaranteed and may result in capital erosion and reduction in net asset value.
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Investing in money market funds are not the same as placing funds on deposit with a bank or deposit taking company. The Funds which are money market funds have no obligation to redeem units at their offering value and such Funds are not subject to the supervision of the Hong Kong Monetary Authority. Investors may not recoup the original amount invested in the Funds.
The Funds' investments may involve substantial credit, currency, volatility, liquidity, interest rate, tax and political risks. Investors may suffer substantial loss of their investments in the Funds.
The Funds are NOT equivalent to time deposits. Investors should not invest in the Funds solely based on the information provided herein and should read the offering document of the Fund for details.
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