Please upgrade your browser

We take your security very seriously. In order to protect you and our systems, we are making changes to all HSBC websites that means some of the oldest web browser versions will no longer be able to access these sites. Generally, the latest versions of a browser (like Edge, Chrome, Safari, etc.) and an operating system family (like Microsoft Windows, MacOS) have the most up-to-date security features.

If you are seeing this message, we have detected that you are using an older, unsupported browser.

See how to update your browser

Five insights in five minutes

Five in Five: HK dividends, multi-asset ESG, Water Day, EM, China
25 March 2022

    Dear readers,

    Five in five will be taking an Easter break and come back on April 22. Many thanks again for all your support, feedback, and topic suggestions. We look forward to connecting with you again in a few weeks.

    Stuart, Seb, Travis, Kelvin & Dupe.

    Hong Kong dividends

    Ring ring! Congratulations, you have won a prize! At least that’s how investors of China’s largest telecom stock felt yesterday when the company surprised them with a big year-end dividend (although technically shareholders are funding it themselves – but let’s not spoil the fun). Up almost 40 per cent from last year, the distribution equates to a dividend yield of 7.5 per cent. That might look exceptional to readers in other markets, but it is by no means an outlier in Hong Kong these days. Indeed, there are close to 100 stocks with market caps over 30 billion in local dollars on the main exchange and yields of more than four per cent. The industries with the largest number of high paying stocks are financials, industrials, real estate, and utilities, as the chart below indicates – although the yields for some real estate companies have been distorted somewhat by their fallen denominators. And if you are a local investor, dividends are not even taxed, so you get what you see. Remember to pick up the phone next time it rings!

    Conversation starter for… China equities

    Hong Kong dividends   For illustrative purpose only. 

    Multi-asset ESG

    Our analysts have been burning the midnight canola oil to enhance understanding of how ESG scores can impact portfolio allocations. Focusing on developed equity returns for the past 15 years, where ESG data have become more readily available, they spotted a notable difference in outcomes when adjusting allocations based on absolute ESG scores versus the momentum in scores. Even with regional active weights limited to less than five percent, half a percentage point difference in annual returns was found. One reason for this is that tilting allocations based solely on current ESG scores reveals a bias towards European stocks versus the US. Adjusting allocations towards markets with greater momentum in scores, however, led to improved performance without altering portfolio risk, as can be seen below. Given that markets are forward looking, this intuitively makes sense. ESG-focused investments are on track to account for more than a third of total industry assets in the next few years. Investors can benefit from a robust approach to integrating ESG into their portfolios.

    Conversation starter for… multi-asset, equity portfolios, ESG integration

    Multi-asset ESG   For illustrative purpose only. 

    Do you find this useful?
    Star - 1 out of 5 Star - 2 out of 5 Star - 3 out of 5 Star - 4 out of 5 Star - 5 out of 5

    World Water Day

    Last Wednesday was World Water Day, a United Nations initiative to splash attention on the liquid resource. This year’s theme was ‘groundwater’, which supplies almost half of all drinking water in a world where the UN reckons that almost two billion people will be living with water scarcity by 2025. Shrinking water supplies can also have a huge impact on markets and economies. As per the chart below, agriculture and production processes heavily depend on water. Take power generation for example, 90 per cent of which is water-intensive. For investors, it means that water scarcity can turn into an unaccounted source of financial risk – especially if companies’ efforts to lower their water intensity isn’t actively monitored and encouraged. But investors are also part of the solution. The World Bank estimates that $114 billion of spending is needed annually over the current decade in order to achieve safe water, sanitation and hygiene access for all by 2030. They also estimate that every dollar invested can result in six-fold returns.

    Conversation starter for… circular economy, climate tech, infrastructure, engagement

    World Water Day   For illustrative purpose only. 

    EM equities

    When stocks are off their rocks – even the MSCI World index has swivelled more than 1.1 per cent a day on average this month – many investors reckon it’s better to own developed shares than emerging ones. Does that make sense now? To be sure, the Sharpe ratio (a measurement of return for a unit of risk) of the MSCI Emerging Market index is currently four-fifths lower than the US equivalent. Don’t forget, however, that the ratio was in the former’s favour for a decade after 2002, which included the financial crisis. And as you can see below, while the risk premium to hold emerging equities over America’s finest has surged this year, the line does mean revert. If it does, active managers can benefit – the rolling month average return dispersion of stocks in MSCI emerging markets is three percentage points higher than the MSCI World. Meanwhile, the concentration risk in emerging indices (as measured by the inverse of the sum of squared weights) has doubled over the past decade as the biggest names got bigger. All the more reason to trust analysts and portfolio managers who know their holdings intimately.

    Conversation starter for… emerging equities, global equities, Asian equities

    EM equities   For illustrative purpose only. 

    China macro

    Against the backdrop of daily Covid cases breaking four thousand for the first time since February 2020, China lowering its 2022 growth target to 5.5 per cent two weeks ago now seems like a bad omen. Premier Li Keqiang stated that the country will be facing some macro challenges ahead, “under the triple pressures of shrinking demand, disrupted supply and weakening expectations.” In addition, the recent double-digit exports growth (see chart) that fuelled China’s recovery will be hard to maintain, due to a fading low-base effect. But Beijing fighting back. The central government’s expenditures will increase four per cent this year and its transfer payments to cash-strapped local governments will rise by almost a fifth, or around 1.5 trillion yuan. Tax cuts and refunds for companies should amount to another 2.5 trillion yuan, with a special emphasis to help small and micro businesses. There are also targeted supportive policy measures that align with the country’s medium-to-long term development plan. The upcoming edition of China Insights will have the details.

    Conversation starter for… China equities, China fixed income, Asia credit

    China macro   For illustrative purpose only. 


     


    Getting started
     

    Learn more about HSBC funds

    Find out how to invest

    Individual investors

    Fund center

    Contact us

    Financial intermediaries

    Fund center

    Contact us

    Institutional investors

    Contact us

    Want to stay connected with us?

    Subscribe to our newsletter now


    Important information

    For Professional Clients and intermediaries within countries and territories set out below; and for Institutional Investors and Financial Advisors in Canada and the US. This document should not be distributed to or relied upon by Retail clients/investors.

    The value of investments and the income from them can go down as well as up and investors may not get back the amount originally invested. Past performance contained in this document is not a reliable indicator of future performance whilst any forecasts, projections and simulations contained herein should not be relied upon as an indication of future results. Where overseas investments are held the rate of currency exchange may cause the value of such investments to go down as well as up. Investments in emerging markets are by their nature higher risk and potentially more volatile than those inherent in some established markets. Economies in Emerging Markets generally are heavily dependent upon international trade and, accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries and territories with which they trade. These economies also have been and may continue to be affected adversely by economic conditions in the countries and territories in which they trade. Mutual fund investments are subject to market risks, read all scheme related documents carefully.

    The contents of this document may not be reproduced or further distributed to any person or entity, whether in whole or in part, for any purpose. All non-authorised reproduction or use of this document will be the responsibility of the user and may lead to legal proceedings. The material contained in this document is for general information purposes only and does not constitute advice or a recommendation to buy or sell investments. Some of the statements contained in this document may be considered forward looking statements which provide current expectations or forecasts of future events. Such forward looking statements are not guarantees of future performance or events and involve risks and uncertainties. Actual results may differ materially from those described in such forward-looking statements as a result of various factors. We do not undertake any obligation to update the forward-looking statements contained herein, or to update the reasons why actual results could differ from those projected in the forward-looking statements. This document has no contractual value and is not by any means intended as a solicitation, nor a recommendation for the purchase or sale of any financial instrument in any jurisdiction in which such an offer is not lawful. The views and opinions expressed herein are those of HSBC Global Asset Management at the time of preparation, and are subject to change at any time. These views may not necessarily indicate current portfolios' composition. Individual portfolios managed by HSBC Global Asset Management primarily reflect individual clients' objectives, risk preferences, time horizon, and market liquidity. Foreign and emerging markets. Investments in foreign markets involve risks such as currency rate fluctuations, potential differences in accounting and taxation policies, as well as possible political, economic, and market risks. These risks are heightened for investments in emerging markets which are also subject to greater illiquidity and volatility than developed foreign markets. This commentary is for information purposes only. It is a marketing communication and does not constitute investment advice or a recommendation to any reader of this content to buy or sell investments nor should it be regarded as investment research. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

    We accept no responsibility for the accuracy and/or completeness of any third party information obtained from sources we believe to be reliable but which have not been independently verified.

    HSBC Global Asset Management is a group of companies in many countries and territories throughout the world that are engaged in investment advisory and fund management activities, which are ultimately owned by HSBC Holdings Plc. (HSBC Group). HSBC Global Asset Management is the brand name for the asset management business of HSBC Group. The above communication is distributed by the following entities:

    • In Argentina by HSBC Global Asset Management Argentina S.A., Sociedad Gerente de Fondos Comunes de Inversión, Agente de administración de productos de inversión colectiva de FCI N°1;
    • In Australia, this document is issued by HSBC Bank Australia Limited ABN 48 006 434 162, AFSL 232595, for HSBC Global Asset Management (Hong Kong) Limited ARBN 132 834 149 and HSBC Global Asset Management (UK) Limited ARBN 633 929 718. This document is for institutional investors only, and is not available for distribution to retail clients (as defined under the Corporations Act). HSBC Global Asset Management (Hong Kong) Limited and HSBC Global Asset Management (UK) Limited are exempt from the requirement to hold an Australian financial services license under the Corporations Act in respect of the financial services they provide. HSBC Global Asset Management (Hong Kong) Limited is regulated by the Securities and Futures Commission of Hong Kong under the Hong Kong laws, which differ from Australian laws. HSBC Global Asset Management (UK) Limited is regulated by the Financial Conduct Authority of the United Kingdom and, for the avoidance of doubt, includes the Financial Services Authority of the United Kingdom as it was previously known before 1 April 2013, under the laws of the United Kingdom, which differ from Australian laws.
    • in Austria by HSBC Global Asset Management (Österreich) GmbH which is regulated by the Financial Market Supervision in Austria (FMA);
    • in Bermuda by HSBC Global Asset Management (Bermuda) Limited, of 37 Front Street, Hamilton, Bermuda which is licensed to conduct investment business by the Bermuda Monetary Authority;
    • in Canada by HSBC Global Asset Management (Canada) Limited which provides its services as a dealer in all provinces of Canada except Prince Edward Island and also provides services in Northwest Territories. HSBC Global Asset Management (Canada) Limited provides its services as an advisor in all provinces of Canada except Prince Edward Island;
    • in Chile: Operations by HSBC's headquarters or other offices of this bank located abroad are not subject to Chilean inspections or regulations and are not covered by warranty of the Chilean state. Further information may be obtained about the state guarantee to deposits at your bank or on www.sbif.cl;
    • in Colombia: HSBC Bank USA NA has an authorized representative by the Superintendencia Financiera de Colombia (SFC) whereby its activities conform to the General Legal Financial System. SFC has not reviewed the information provided to the investor. This document is for the exclusive use of institutional investors in Colombia and is not for public distribution;
    • in Finland, Norway, Denmark and Sweden by HSBC Global Asset Management (France), a Portfolio Management Company authorised by the French regulatory authority AMF (no. GP99026) and through the Stockholm branch of HSBC Global Asset Management (France), regulated by the Swedish Financial Supervisory Authority (Finansinspektionen);
    • in France, Belgium, Netherlands, Luxembourg, Portugal, Greece by HSBC Global Asset Management (France), a Portfolio Management Company authorised by the French regulatory authority AMF (no. GP99026);
    • in Germany by HSBC Global Asset Management (Deutschland) GmbH which is regulated by BaFin;
    • in Hong Kong by HSBC Global Asset Management (Hong Kong) Limited, which is regulated by the Securities and Futures Commission;
    • in India by HSBC Asset Management (India) Pvt Ltd. which is regulated by the Securities and Exchange Board of India;
    • in Italy and Spain by HSBC Global Asset Management (France), a Portfolio Management Company authorised by the French regulatory authority AMF (no. GP99026) and through the Italian and Spanish branches of HSBC Global Asset Management (France), regulated respectively by Banca d’Italia and Commissione Nazionale per le Società e la Borsa (Consob) in Italy, and the Comisión Nacional del Mercado de Valores (CNMV) in Spain;
    • in Mexico by HSBC Global Asset Management (Mexico), SA de CV, Sociedad Operadora de Fondos de Inversión, Grupo Financiero HSBC which is regulated by Comisión Nacional Bancaria y de Valores;
    • in the United Arab Emirates, Qatar, Bahrain & Kuwait by HSBC Bank Middle East Limited which are regulated by relevant local Central Banks for the purpose of this promotion and lead regulated by the Dubai Financial Services Authority.
    • in Oman by HSBC Bank Oman S.A.O.G regulated by Central Bank of Oman and Capital Market Authority of Oman;
    • in Peru: HSBC Bank USA NA has an authorized representative by the Superintendencia de Banca y Seguros in Perú whereby its activities conform to the General Legal Financial System - Law No. 26702. Funds have not been registered before the Superintendencia del Mercado de Valores (SMV) and are being placed by means of a private offer. SMV has not reviewed the information provided to the investor. This document is for the exclusive use of institutional investors in Perú and is not for public distribution;
    • in Singapore by HSBC Global Asset Management (Singapore) Limited, which is regulated by the Monetary Authority of Singapore;
    • in Switzerland by HSBC Global Asset Management (Switzerland) AG whose activities are regulated in Switzerland and which activities are, where applicable, duly authorised by the Swiss Financial Market Supervisory Authority. Intended exclusively towards qualified investors in the meaning of Art. 10 para 3, 3bis and 3ter of the Federal Collective Investment Schemes Act (CISA);
    • in Taiwan by HSBC Global Asset Management (Taiwan) Limited which is regulated by the Financial Supervisory Commission R.O.C. (Taiwan);
    • in the UK by HSBC Global Asset Management (UK) Limited, which is authorised and regulated by the Financial Conduct Authority;
    • and in the US by HSBC Global Asset Management (USA) Inc. which is an investment adviser registered with the US Securities and Exchange Commission.

    INVESTMENT PRODUCTS:

    • Are not a deposit or other obligation of the bank or any of its affiliates;
    • Not FDIC insured or insured by any federal government agency of the United States;
    • Not guaranteed by the bank or any of its affiliates; and
    • Are subject to investment risk, including possible loss of principal invested.

    Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided as an "as is" basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively 'the MSCI Parties') expressly disclaims all warranties (including, without limitation, all warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.msci.com)

    Copyright © HSBC Global Asset Management Limited 2022. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Global Asset Management Limited.