At times like these, HSBC Asset Management easily pivots towards emerging markets. The spotlight on growth markets and the need to be nimble and dynamic is ever-sharper, given the difficulty in predicting monetary policy in the world’s major nations. The upshot, amid global macro concerns and rollercoaster markets, is to pivot away from lingering recessionary forces in Europe, the UK and US, in favour of emerging markets (EM) with solid fundamentals and better prospects. This is nothing new to HSBC Asset Management (HSBC AM). As a group, managing USD 651 billion¹ globally, we have been investing across EM for 50 years. Across multiple asset classes and capabilities in EM, we deliver on our goal of connecting the developed and developing world. With deep local insights, we identify a range of differentiated – and diversified – names for bottom-up stock selection, with a dual focus on strong, long-term and sustainable performance. The scope for investors to capitalise on EM continues to grow as structural shifts like the green transition theme and efforts to shore up supply chains gather pace. Finding the fast-growing companies that stand to benefit requires patience, as well as a contrarian perspective. It also reinforces the importance of having an active approach, which adds value to return dispersion and inefficiencies within EM.

Investing in a Resurgent India

A case in point is India, where we have honed our specialist expertise via multiple strategies over nearly three decades. More recently, acquiring L&T Investment Management has put us even closer to the action. Our overall commitment to the country is reflected in AUM of close to USD 12 billion across all local asset classes. In Indian equities, for example, our investment team covers more than 450 companies spanning all sectors and market caps. Such breadth and depth is essential as the country leverages a reform agenda and domestic spending spree, coupled with Initiatives to achieve a ‘Digital India’. A combination of growing resilience, higher capital expenditure and a narrowing current-account deficit are fostering healthy corporate balance sheets and luring global investment flows. At the same time, domestic banks are cleaning up balance sheets, signalling the possible onset of a credit cycle. Highlighting India’s progress, in July, the IMF raised its 2023 growth forecast to 6.1%, setting the stage for it to become the world’s fastest-growing major economy this year.² This is no surprise. From consumption to financial services to infrastructure to IT services – and more, the economy is expected to enjoy long-term growth amid policy continuity and a stable regulatory environment. Add a growing middle class to the mix, plus an expanding young and urbanising population, India is likely to see soaring productivity in the coming decades. While India reaps the benefits of its demographic dividend, investors may see stronger and more robust returns from allocation to the country. For example, as a diversification play, Indian equities stand out against global and regional peers. In addition, the country’s weighting in MSCI EM has grown by over three times, from less than 4% two decades ago to over 14% in the first half of 2023. Inevitably, such a diverse and dynamic market requires the type of robust investment process and disciplined approach to risk management that defines HSBC AM. Further, India represents how we strive to open up a world of opportunity by making clear choices and taking bold actions that we believe will lay the foundations for a better tomorrow. For more information, visit www.assetmanagement.hsbc.co.uk/en/intermediary/investing-in-india.

¹ As of 30 June 2023
² https://www.imf.org/en/News/Articles/2023/07/25/tr072523-transcript-of-world-economic-outlook-update

For Professional Clients only. The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested. Investments in emerging markets are by their nature higher risk and potentially more volatile than those inherent in some established markets. This material does not constitute investment advice or a recommendation to any reader of this material to buy or sell investments. Any views expressed are subject to change at any time. Approved for issue in the UK by HSBC Global Asset Management (UK) Limited, who are authorised and regulated by the Financial Conduct Authority. © Copyright HSBC Global Asset Management (UK) Limited 2023. All rights reserved.
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