HSBC Report: Continually Optimistic About Chinese Stocks

Ask AI · How can artificial intelligence become the key factor driving HSBC’s bullish view on Chinese stocks?

Nandu News reporter Lu Liang. With gold and precious metals prices swinging dramatically, several domestic banks have recently issued risk alerts, which has also led investors to worry about market risk. On March 25, HSBC released its second-quarter global investment outlook, stating that the volatility of global financial markets remains very high, with conditions changing by the minute. Market concerns have persisted, including reasons such as the U.S.’s new tariff measures, artificial intelligence’s impact on software companies, risks of a weaker dollar, and recent geopolitical conflicts in the Middle East.

“Current circumstances have both positive and negative sides.” The report believes that past data show that the Middle East conflict may bring short-term market volatility, but unless an economic downturn occurs afterward or the Federal Reserve is forced to shift and raise interest rates again, it may not necessarily trigger long-term market adjustments. It estimates that the likelihood of the above risks occurring is relatively low.

“We are bullish on stocks in Mainland China, Hong Kong, Singapore, South Korea, and Japan.” Xiang Zheng, Chief Investment Officer for China at HSBC Private Banking and Wealth Management, said that Asia brings together many leading artificial intelligence and technology companies, semiconductor manufacturers, and electronic commerce giants. With the ongoing global artificial intelligence trend and government policy support, the growth momentum is accelerating. On the sector front, it is bullish on investment opportunities in Asia’s information technology, communication services, consumer discretionary, financials, materials, and healthcare industries. He believes that China is in a leading position in the competition in artificial intelligence. HSBC is bullish on Chinese stocks and, through a “barbell strategy,” focuses on innovative leading enterprises and high-quality high-dividend stocks. On the one hand, it aims to capture China’s structural growth opportunities; on the other hand, it can support an investment portfolio with stable dividend income.

However, this “second-quarter global investment outlook” report also offers views on the recent sell-off in the technology sector. The view is that “the technology sector’s sell-off and the trend of funds rapidly rotating out of the technology sector may not be entirely negative in our view. Investors are dispersing from technology sectors where positions are highly concentrated into other sectors of the market, and the valuation of the technology sector has also been adjusted to a more reasonable level. It is worth noting that technology stocks’ earnings are still consistently exceeding expectations.”

HSBC believes that supported by strong capital expenditure, artificial intelligence will continue to be the key driving force for earnings growth and efficiency improvements across industries and across different regions. With artificial intelligence development continuing, investment spending staying strong, and fiscal support in the mix, the outlook for cyclical industries is also quite optimistic. Investment opportunities in industrial sectors—including the materials industry—will also be expanded.