The world's local bank

China banks benefit from higher interest _Part 2(20 May 2011)

Transcription Summary

Q: Asia countries have been clouded by monetary tightening over the last few months, with China one of the most aggressive. What is your view on China?

In April, we raised the Chinese market to overweight for the first time in about a year.
The Chinese authorities have tightened monetary policy quite significantly. Some of the monetary indicators have been coming down as a result. Chinese inflation is likely to peak out at some point of this quarter.
Going back to long term story in China, it still looks very positive growth remains good, consumption is strong, and investment is good.

Q: The developed markets and emerging markets performed diversely since the beginning of this year. Which markets do you prefer now?

We still prefer the emerging markets as the growth potential for the emerging markets is better than that in the developed markets.
Valuations of the emerging markets are cheaper, while the risk, in the sense of volatility, is similar to that of the developed markets.

Q: Finally, what are your favourite sectors and what not?

The financial sector in Asia looks very interesting. China banks, in particular, benefit from higher interest rates, and they look very cheap. Their long term growth story remains intact.
We also overweight on consumer staples, such as supermarkets and food producers. As the worries of inflation start to fade, this sector will come back into the highlight again.
Asia IT sector is worrying because it is not benefiting from the big shift from PCs and notebooks to Apple.
We are also underweight on consumer discretionary, ranging from autos to department stores. Some of those big exporters in this sector will suffer from high oil prices and fragile consumer confidence in the western economies.

Speaker Biography

Bruno Lee

Regional Head of Wealth Management
Retail Banking and Wealth Management, Asia-Pacific
The Hongkong and Shanghai Banking Corporation Limited

Bruno Lee is HSBC's Regional Head of Wealth Management, Retail Banking and Wealth Management, Asia-Pacific. He has overall responsibility for developing and implementing product strategies and propositions for all wealth management products and services including deposits, investment and insurance, in the Asia-Pacific region.

Garry Evans

Global Head of Equity Strategy, Global Research, HSBC Global Banking and Markets

Garry heads HSBC's equity strategy team worldwide. His previous roles at HSBC include Asia Pacific Equity Strategist, Head of Pan-Asian Equity Research, and Japan Strategist. Garry began his career as a financial journalist and was editor of Euromoney magazine for eight years before joining HSBC in Tokyo in 1998. Garry is based in Hong Kong.

Risk Disclosure / Disclaimers

This video is not intended to provide investment advice and does not constitute a solicitation for the making of any deposit or investment product.
The Hongkong and Shanghai Banking Corporation Limited ( the "Bank") neither endorses nor is responsible for the accuracy or reliability of, and under no circumstances will the Bank be liable for any loss or damage caused by reliance on, any opinion, advice or statement made in this video.
The opinions expressed are those of the featured speakers, and except where a speaker is specifically identified as a representative of the Bank, do not represent the Bank's views. The opinions are subject to change without notice and should not be construed as a recommendation of any individual holdings or market sectors.
Investment involves risk, value of investment may move up or down, and may become valueless. The opinions expressed above may vary due to market factors and conditions without further notice. Past performance figures shown are not indicative of future performance. The information contained in this video has not been reviewed in the light of your personal financial circumstances. Reliance upon the information is at your sole discretion. You should carefully consider whether any investment products are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. The relevant product offering documents should be read for further details.
The investment decision is yours but you should not invest in any products unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
This video has not been reviewed by the Securities and Futures Commission of Hong Kong or any regulatory authority in Hong Kong.

Bull market not yet over _Part 1(13 May 2011)

Transcription Summary

Q: With the Middle East unrest as well as the devastating natural disaster in Japan, what are the risks to recovery ahead?

The higher oil price is starting to affect consumer confidence, particularly in the US and in Europe. Corporate margins may also be squeezed by the high oil price.
Cyclical indicators, such as the US ISM manufacturing index, may turn down from the current high level.
The equity market will be a bit difficult over the next few months.

Q: Inflation has been hot topic recently. In addition to emerging markets, some developed markets, such as the eurozone, have also raised rates to curb rising inflation. How big is inflation as a concern now?

The worries about the inflation are going to shift away from emerging markets towards the
developed markets.
Central banks in some of the emerging markets have already raised rates to curb inflation, such as Brazil, India and China.
The ECB will probably raise rates further this year. With the US ending quantitative easing in June, the risk is actually that the central banks in the developed markets start now to move against inflation.

Q: What is your outlook on equity market in the second half of 2011? Some investors concern the bull market is going to end. What do you think?

The bull market is not yet over as it is only two years old, which still looks very young.
Global growth still looks good. Corporate earnings are growing strongly.
Interest rates, even if they do go up a bit in developed markets, are still at extremely low.
Putting those together, the fundamental picture for global equity market still seems to be strong.

Speaker Biography

Bruno Lee

Regional Head of Wealth Management
Retail Banking and Wealth Management, Asia-Pacific
The Hongkong and Shanghai Banking Corporation Limited

Garry Evans

Global Head of Equity Strategy, Global Research, HSBC Global Banking and Markets

Risk Disclosure / Disclaimers

This video is not intended to provide investment advice and does not constitute a solicitation for the making of any deposit or investment product.
The Hongkong and Shanghai Banking Corporation Limited ( the "Bank") neither endorses nor is responsible for the accuracy or reliability of, and under no circumstances will the Bank be liable for any loss or damage caused by reliance on, any opinion, advice or statement made in this video.
The opinions expressed are those of the featured speakers, and except where a speaker is specifically identified as a representative of the Bank, do not represent the Bank's views. The opinions are subject to change without notice and should not be construed as a recommendation of any individual holdings or market sectors.
Investment involves risk, value of investment may move up or down, and may become valueless. The opinions expressed above may vary due to market factors and conditions without further notice. Past performance figures shown are not indicative of future performance. The information contained in this video has not been reviewed in the light of your personal financial circumstances. Reliance upon the information is at your sole discretion. You should carefully consider whether any investment products are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. The relevant product offering documents should be read for further details.
The investment decision is yours but you should not invest in any products unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
This video has not been reviewed by the Securities and Futures Commission of Hong Kong or any regulatory authority in Hong Kong.

Unleash multiple sources of growth (06 May 2011)

Transcription Summary

Q: The global economy continues to recover despite tensions in the Middle East and European debt problems persist. Is the macro backdrop supportive for high yield
bond investments?

Risky asset investment is supported by global growth recovery, low interest rate environment, and structural improvements in domestic consumption in Asia, particularly in China and India.
Potential monetary tightening in the US would be unfavourable to bond investment in general. Yet its impact on high yield bond investments would be mild if the rate hikes come in gradually and the market expectation is well managed.

Q: What do you think about the investment value in the Asian high yield bond markets? How do they score against the Europe and the US counterparts?

We do see attractive value in Asian high yield bonds. Firstly, low government debts and high growth rates are supportive for credit rating upgrades.
Furthermore, corporate in Asia has sound financials with leverage much lower than their US and
European counterparts.
Besides, the asset class is supported by global liquidity inflows into emerging markets and strong local investment demands in the Asian region.

Q: What kind of opportunities is available in the Asian high yield bond sector and where are you finding value?

For example, opportunities can be found in government, quasi-government, corporate and Asian currency bonds. There are also opportunities in lesser known areas such as convertible bonds and non-rated bonds (e.g. RMB bonds).
We believe there are relatively higher investment values in the BB crossover (i.e. a bond ranked investment grade by one rating agency and non-investment grade by another) and unrated sectors, where prudent credit analysis would help us select attractively valued bonds with good fundamentals.
Despite the strong market rally in 2009 and 2010, the credit spreads of Asian high yield bonds remain attractive, as compared to historical average.

Speaker Biography

Bruno Lee

Regional Head of Wealth Management
Retail Banking and Wealth Management, Asia-Pacific
The Hongkong and Shanghai Banking Corporation Limited

Cecilia Chan

CIO of Fixed Income, Asia-Pacific
HSBC Global Asset Management

Cecilia Chan leads the Fixed Income team in managing Hong Kong and Asian fixed income portfolios, and plays an important role in business strategy development and implementation for global fixed income structure.

Ms Chan has been working in the industry since 1987. Prior to joining HSBC in 1994, Ms Chan worked for Sun Alliance & Royal Insurance Company in Australia as a fixed income fund manager and Baring Securities as a senior quantitative research analyst based in Hong Kong, Japan and Australia.

Ms Chan holds a Bachelor's degree in Commerce (First Class Honors) from the University of New South Wales (Australia), a Master's degree in Economics from Australia National University (Australia), a Master's degree in Applied Finance and an MA in Business Research Studies, both from Macquarie
University (Australia).

Risk Disclosure / Disclaimers

This video is not intended to provide investment advice and does not constitute a solicitation for the making of any deposit or investment product.
The Hongkong and Shanghai Banking Corporation Limited ( the "Bank") neither endorses nor is responsible for the accuracy or reliability of, and under no circumstances will the Bank be liable for any loss or damage caused by reliance on, any opinion, advice or statement made in this video.
The opinions expressed are those of the featured speakers, and except where a speaker is specifically identified as a representative of the Bank, do not represent the Bank's views. The opinions are subject to change without notice and should not be construed as a recommendation of any individual holdings or market sectors.
Investment involves risk, value of investment may move up or down, and may become valueless. The opinions expressed above may vary due to market factors and conditions without further notice. Past performance figures shown are not indicative of future performance. The information contained in this video has not been reviewed in the light of your personal financial circumstances. Reliance upon the information is at your sole discretion. You should carefully consider whether any investment products are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. The relevant product offering documents should be read for further details.
The investment decision is yours but you should not invest in any products unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
This video has not been reviewed by the Securities and Futures Commission of Hong Kong or any regulatory authority in Hong Kong.

Asian balanced strategy (29 April 2011)

Transcription Summary

Q: The Japan earthquake stirred up market volatility. How would this affect the investment opportunities in Asia?

Japan accounts for 8-9% of global production. After the earthquake, the market was most concerned about the extent of impact on Japanese companies' productions and factories.
The stock market of South Korea saw a double-digit increase in March as the market believes South Korean companies will directly benefit from the earthquake.
The Taiwan stock market barely edged up because the supply of IT components imported from Japan to Taiwan directly will be affected.

Q: The unrest in the Middle East and Northern Africa region has caused the increase in the oil price. How will this affect the Asian markets?

The oil price topped US$120, which poses an upward pressure on company's production costs.
It is commonly believed that high oil prices stimulate inflation. However, as central banks in Asia have begun tightening monetary policies, we believe that inflation can be put under control.

Q: What opportunities are currently available to investors in the Asian markets?

Given the volatile market after the Japan quake and the oil price hike due to the North Africa and Middle East unrest, investors may consider to adopt a balanced investment strategy to capture the growth momentum of both stocks and bonds.
Bonds offer steady income streams to investors. Those with potential for credit ratings upgrade can
be considered.
In terms of stocks, investors may choose companies with stable cash flow and earnings, as well as attractive dividend yields.

Speaker Biography

Bruno Lee

Regional Head of Wealth Management
Retail Banking and Wealth Management, Asia-Pacific
The Hongkong and Shanghai Banking Corporation Limited

Frankie Tai

Associate Director, Fixed Income
Invesco

Frankie Tai was appointed as Associate Director in March 2010 and is responsible for money market instruments and fixed income strategies and investments. Mr. Tai first joined Invesco as an Investment Services Analyst in 1999 and was the Manager of the Investment Services team. In June 2005, he was appointed as Fund Manager.

Mr. Tai holds a Bachelor of Commerce degree from the University of Otago and a Master of Science degree from the University of London. He is a holder of the Chartered Financial Analyst designation.

Risk Disclosure / Disclaimers

This video is not intended to provide investment advice and does not constitute a solicitation for the making of any deposit or investment product.
The Hongkong and Shanghai Banking Corporation Limited ( the "Bank") neither endorses nor is responsible for the accuracy or reliability of, and under no circumstances will the Bank be liable for any loss or damage caused by reliance on, any opinion, advice or statement made in this video.
The opinions expressed are those of the featured speakers, and except where a speaker is specifically identified as a representative of the Bank, do not represent the Bank's views. The opinions are subject to change without notice and should not be construed as a recommendation of any individual holdings or market sectors.
Investment involves risk, value of investment may move up or down, and may become valueless. The opinions expressed above may vary due to market factors and conditions without further notice. Past performance figures shown are not indicative of future performance. The information contained in this video has not been reviewed in the light of your personal financial circumstances. Reliance upon the information is at your sole discretion. You should carefully consider whether any investment products are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. The relevant product offering documents should be read for further details.
The investment decision is yours but you should not invest in any products unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
This video has not been reviewed by the Securities and Futures Commission of Hong Kong or any regulatory authority in Hong Kong.