Rebalance your portfolio now as the economy enters an expansion phase, HSBC says
HSBC Asset Management has told investors to prepare for the “mission economy” and an important shift in the macro regime.
In its mid-year outlook report, seen exclusively by CNBC, the British lender said investors need to prepare for the business cycle to transition from recovery to expansion, bringing a period of lower investment returns and a shift toward “activist” fiscal policy.
Gross domestic product has recovered from the Covid plunge in the U.S., China and across industrial Asia and corporate profits are experiencing a V-shaped rebound, with 2022 earnings expectations now ahead of pre-Covid forecasts.
This has led monetary policy debate toward timetables for tapering of quantitative easing programs, and HSBC suggested that this indicates that we are entering the mid-cycle, expansion phase of the business cycle.
The ‘mission economy’
Alongside the cyclical transition to expansion, the shift in policy consensus in advanced economies is now reflecting a greater degree of “fiscal activism.”
While acknowledging that there is no “silver bullet” solution, Little suggested investors look for new portfolio diversifiers within a broader universe of alternative asset classes.
“Investors should look to get as close to real, inflation-protected cash-flows as possible. Infrastructure debt is a strong candidate for that and has delivered decent historic returns, offers a higher spread today than global credit, and has a more benign loss profile,” he said.
Reference: CNBC
Thai
Eng