HSBC has lowered its exposure to U.S. equities while increasing allocations to European and emerging market stocks, maintaining what it describes as a “firmly risk-on” tactical asset allocation.
The move comes as the bank points to shifting bearish narratives that, in its view, have not undermined the broader constructive outlook for global markets.
HSBC stays risk-on despite market concerns
In a recent note, HSBC’s chief multi-asset strategist Max Kettner said negative market themes are changing almost daily. These include geopolitical tensions, questions about Federal Reserve independence and speculation over a potential AI-driven economic slowdown.
However, HSBC’s internal indicators continue to support a pro-risk stance. According to Kettner, both cyclical models and machine-learning signals remain positive.
The bank added that investor sentiment and positioning measures are currently neutral, while cyclical indicators have strengthened in recent months.
“A lot of our cyclical leading indicators have moved sharply higher over the past two months, particularly in capital expenditure and manufacturing,” Kettner noted. HSBC’s valuation-adjusted momentum models and machine-learning gauges are also flashing what it describes as a “green light.”
Increased allocation to Europe and emerging markets
As part of the portfolio shift, HSBC is now more overweight in equities outside the United States. At the same time, it has increased its underweight position in U.S. Treasurys.
The bank continues to favor high-yield credit and emerging-market debt. It has also added to its exposure in emerging-market equities and fixed income.
HSBC closed its tactical overweight position in Japanese equities and ended its underweight stance on Japanese government bonds. Additionally, it removed its overweight in U.K. gilts and reduced its U.S. Treasury allocation further, describing the position as a “much deeper underweight.”
Stronger global cyclical momentum
HSBC said its positioning reflects improving global cyclical momentum and stronger prospects for manufacturing-driven economies, including Australia and Sweden.
Overall, the bank’s asset allocation strategy signals confidence in global growth trends outside the United States, with emerging markets and select developed markets seen as better positioned in the current cycle.
