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Think Future 2024: Your guide to the global investment landscape

7 Dec 2023

Willem Sels

Global Chief Investment Officer, HSBC Global Private Banking and Wealth

Navigating a complex world through quality assets and structural opportunities

The financial markets have experienced another eventful year, from the collapse of Silicon Valley Bank in the first quarter to the geopolitical conflict in the Middle East in October. Moreover, central banks' aggressive rate hikes have sent bond yields to multi-year highs and made financial conditions more challenging.

As we look ahead to 2024, we see two positive drivers on the horizon. The number one challenge of rate hikes in major economies is finally fading away. The other positive is that the US economy appears to be heading for a soft landing, mitigating the risk of a global recession. These developments should allow financial markets to breathe a sigh of relief.

However, Europe is teetering on the brink of recession will continue to weigh on global economic growth, while lingering geopolitical tensions and a busy election calendar in 2024 promise further bouts of market volatility. What should investors do in this complex environment?

Positioning for a mild acceleration of growth in the second half of 2024

Although global growth will be relatively slow, it remains positive with a full-year GDP growth forecast of 2.3% for 2024. In fact, we expect a mild acceleration in the second half of 2024 because falling inflation should help drive consumption, while the expectation of rate cuts led by the US in Q3 2024 should support investment and boost margins. What's more, we see long-term structural trends turning into attractive opportunities.

Setting sail on the right course

Bond yields remain at attractive levels but tight financial conditions, slow growth and heightened geopolitical risks have led us to maintain our preference for high-quality bonds. What has changed from the last quarter is that government bonds of medium-to-long duration in developed markets look more attractive, as do Indian local currency bonds given their compelling yields, diversification benefits and India's growth prospects.

In the equity market, we prefer quality large-cap companies because they can generally withstand higher rates and market uncertainty better. Earnings potential will become a key metric for stock selection. Geographically, the US offers solid fundamentals and structural opportunities, such as the re-industrialisation trend and rapid innovation. That should allow companies in the technology, industrials, consumer discretionary and healthcare sectors to surprise positively on earnings.

In Asia, growth momentum in India and Indonesia remains strong. In addition, we expect earnings in the Asian tech sector to bottom out soon, and South Korea should see a broad-based recovery in 2024 as the global tech cycle improves. Sustainability remains an important theme for investors, especially with the UN Climate Change Conference (COP 28) turning the spotlight on the need for more global collaboration to address climate change. With ongoing investment in renewable energy and biodiversity, and continued improvement in ESG governance, companies that can take advantage of these developments will be well-placed for long-term outperformance.

A focus on quality and fundamentals has served us well in 2023 and we feel the same will be true going into next year. But we see many opportunities that we want to capture and believe that the beginning of the year is always a good time to review your portfolio. We hope our investment themes will help you achieve your investment and protection goals. Best wishes for a successful investment journey in 2024.

Investment themes

Regional market outlook

Key data to watch

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