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Asian equities: Investing in resilience

Important information

  • The Funds invests mainly in Asian equities (excluding Japan).
  • The Funds are subject to the risks of investing in emerging markets and smaller companies.
  • 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.
  • Because the Funds’ base currency, investments and classes may be denominated in different currencies, investors may be affected adversely by exchange controls and exchange rate fluctuations. There is no guarantee that the currency hedging strategy applied to the relevant classes will achieve its desired result.
  • The Funds may invest in financial derivative instruments for investment purpose which may lead to higher volatility to its 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.
  • 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.
  • Unit trusts are NOT equivalent to time deposits. Investors should not invest in the Funds solely based on the information provided in this document and should read the offering document of the Funds for details.

 

Covid-19 vaccine rollouts, a rising US Treasury yield and persistent sector rotation have steered global equity markets so far this year. Against the backdrop of rising market volatility, we believe this is the right time for long-term investors to shift their attention to structural growth stories in Asia over the near-term cyclical recovery trade.

Asian equities are well placed to benefit from a confluence of positive factors as economic recovery in the region broadens and corporate confidence strengthens. Join us here to understand the catalysts driving the asset class in 2021 and uncover exciting investment opportunities across markets and sectors.

 

Megatrends in Asia

View our video/podcast for a quick snapshot of the market updates and key drivers of Asian equities in 2021.

Why invest in Asian equities?

After leading the post-pandemic recovery in 2020, North Asian economies have continued to broaden their growth trajectory amidst low virus risks. Owing to the region’s highly diverse social and economic profile, we expect the recovery story to stay broadly on track amidst supportive policies, even as some countries face temporary blips their virus mitigation or vaccination efforts.

Asia ex-Japan recovery still on track and broadening

GDP growth 2021F

GDP growth 2021F

Source: Bloomberg, HSBC Asset Management, as of 30 June 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.

Asian equities offer compelling risk-return given its relatively strong fundamentals. The asset class has been attracting comparatively strong inflows since the final quarter of 2020 amidst the ongoing economic recovery, improved earnings and liquidity support. Better income potential has also added to the appeal with 45% of the companies in the index resuming or increasing their dividends this year vs. 2020 (data from Bloomberg).

Total return (price + dividends) since 2001

Total return (price + dividends) since 2001 

Source: MSCI, Bloomberg, HSBC Asset Management, as of 30 June 2021.

Past performance is not indicative of future performance. Any views expressed were held at the time of preparation and are subject to change without notice. While any forecast, projection or target where provided is indicative only and not guaranteed in any way. HSBC Asset Management accepts no liability for any failure to meet such forecast, projection or target.

Despite its sharp rally in 2020 MSCI Asia ex Japan’s valuations remain reasonable. Its forward P/E is trading at 16.5x as of end June compared to 23.2x for the US and 20.6x for global equities.

Relatively attractive valuations vs. US/global equities

Forward Price to Earning Ratio (x)

Forward Price to Earning Ratio (x)

Source: Bloomberg as of 30 June 2021. Investment involves risks. Past performance is not indicative of future performance
Indexes: MSCI US, MSCI World, MSCI Europe ex UK, MSCI Japan, MSCI UK, MSCI Asia Pacific ex Japan and MSCI Emerging Market. Investment involves risks. Past performance is not indicative of future performance. For illustration only.

Any views expressed were held at the time of preparation and are subject to change without notice. While any forecast, projection or target where provided is indicative only and not guaranteed in any way. HSBC Asset Management accepts no liability for any failure to meet such forecast, projection or target.

 

Why consider HSBC’s Asian equity capabilities

Solid track record

Solid track record

HSBC Asset Management has been successfully managing Asian equity capabilities through various market cycles since 1973. Our three flagship Asian equity funds outranked most of their peers over the past five years (see table below for details).

Suited to different investor appetites

Suited to different investor appetites

We run several differentiated strategies with high active share driven by a rigorous bottom up stock selection process. Our range of Asian equity products cater to investors looking for both income and capital growth.

Integrated sustainability

Integrated sustainability

ESG is fully incorporated into our investment process to mitigate risks and capture opportunities. HSBC Asset Management received an A+ rating from UN Principles for Responsible Investment (PRI), across all categories in its 2020 assessment report.

Experienced and empowered team

Experienced and empowered team

18 years of average industry experience with average tenure of 10 years at HSBC. Team consists of single country experts with on-the-ground insights as well as skilled sector specialists.

Note: Representative overview of the investment process, which may differ by product, client mandate or market conditions.

Peer group quartile ranking of HSBC’s Asian equity capabilities

Based on cumulative performance (as of 30 June 2021)

6M

YTD

1Y

2Y

3Y

4Y

5Y

HSBC GIF Asia ex Japan Equity

1

1

1

2

1

2

2

HSBC GIF Asia ex Japan Equity Smaller Companies

2

2

1

2

4

2

2

HSBC GIF Asia Pacific ex Japan Equity High Dividend

2

2

3

2

2

1

1

Source: Morningstar, as of 30 June 2021. Quartile rankings measure the fund’s total return performance during the respective period against other funds in the same category – EAA OE Asia ex-Japan Equity, EAA OE Asia ex-Japan Small/Mid-cap Equity and EAA OE Asia-Pacific ex-Japan Equity Income, with 1st quartile as the highest ranking and the 4th quartile the lowest ranking.
Investment involves risks. Past performance is not indicative of future performance. 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 forecast, projection or target. The information above is provided by and represents the opinions of HSBC Asset Management and is subject to change without notice. For illustrative purposes only.

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