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Will the West derail the East?_Part 1 (23 July 2010)

Transcription Summary

Q: Can Asia and emerging countries withstand a slowdown in the West?

Asia is still in good shape with general economic outlook for Asia 2H2010 remaining bullish. The data suggest economic activity will slow across the region in the 2H10 but this is not a double dip.
The HSBC Emerging Markets Index (EMI) for 2Q10 indicates that business activity in emerging markets continued to expand, albeit at a slower pace.
Export slowdown is not a worry, supported by strong domestic demand.

Q: Export is one of key driving forces to Asian economic growth. What are the trends in Asian trade pattern?

Exports to the US and Europe will gradually slow down but not collapse like in 2008.
In addition, the intra-Asia trade will likely be positive going forwards. The biggest increase in trade patterns in recent years has been between emerging nations.
The main drivers for Asian continuing growth will be investment and domestic consumption.

Q: Which countries do you particular favor in Asia?

There are two different types of economies in Asia. Big economies like India and China are less sensitive to trade while smaller economies like Singapore and Hong Kong are more exposed to the slowdown in the West.
Big markets are expected to be more resilient but smaller economies will benefit more from China and India's growth.

Speaker Biography

Bruno Lee

Regional Head of Wealth Management
Personal Financial Services, Asia-Pacific
The Hongkong and Shanghai Banking Corporation Limited

Bruno Lee is HSBC's Regional Head of Wealth Management, Personal Financial Services, Asia-Pacific. He has overall responsibility for developing and implementing product strategies and propositions for all wealth management products and services including deposits, investment and insurance, in the Asia-Pacific region.

Frederic Neumann

Regional Head of Wealth Management
Managing Director, Co-Head of Asian Economic Research
The Hongkong and Shanghai Banking Corporation Limited

Frederic Neumann is Managing Director, Co-Head of Asian Economic research of HSBC Global Research. He is responsible for managing HSBC's economic research team in Asia-Pacific ex-Greater China, further developing economic products in the region and ensuring broad and seamless delivery of research offering across the HSBC platform.

Before joining HSBC in 2006, Neumann taught graduate level courses at the Johns Hopkins University, the Wharton Business School of the University of Pennsylvania, and the Graduate School of Pacific Studies and International Relations at UC San Diego, on Asian sovereign risk analysis, international financial markets, international monetary policy, and Southeast Asian political culture. He also served as a consultant on Asian economic and political affairs to the World Bank, and various government agencies. He is also a former research associate of the Peterson Institute for International Economics in Washington, DC.

A former Fulbright scholar, Neumann holds a PhD in International Economics and Asian Studies.

Risk Disclosure / Disclaimers

This video is not intended to provide investment advice and does not constitute a solicitation for the making of any deposit or investment product.
The Hongkong and Shanghai Banking Corporation Limited ( the "Bank") neither endorses nor is responsible for the accuracy or reliability of, and under no circumstances will the Bank be liable for any loss or damage caused by reliance on, any opinion, advice or statement made in this video.
The opinions expressed are those of the featured speakers, and except where a speaker is specifically identified as a representative of the Bank, do not represent the Bank's views. The opinions are subject to change without notice and should not be construed as a recommendation of any individual holdings or market sectors.
Investment involves risk, value of investment may move up or down, and may become valueless. The opinions expressed above may vary due to market factors and conditions without further notice. Past performance figures shown are not indicative of future performance. The information contained in this video has not been reviewed in the light of your personal financial circumstances. Reliance upon the information is at your sole discretion. You should carefully consider whether any investment products are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. The relevant product offering documents should be read for further details.
The investment decision is yours but you should not invest in any products unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
This video has not been reviewed by the Securities and Futures Commission of Hong Kong or any regulatory authority in Hong Kong.

Bonds offer potential investment opportunities_Part 2 (16 July 2010)

Transcription Summary

Q: Will the European sovereign debt crisis increase bond market risk?

Challenging conditions in the capital markets since the global financial crisis have created unprecedented dislocations and selective opportunities for investors.
While the European sovereign debt crisis has caused market volatility to spike, market sentiment has improved after the European Union and the IMF approved rescue packages.
Under current market conditions, closer attention should be paid to the credit quality of the bonds and their potential default risk.

Q: What is the relationship between currency risk and bond investment?

For bonds that are denominated in foreign currency, their value might fall if the currency depreciates.
Except for HKD-denominated bonds, all bonds that are denominated in foreign currencies are subject to currency risk. As the HKD is pegged to the USD, local bond investors have lower currency risk if they invest in USD-denominated bonds.

Q: Under the current market condition, how could bond investors minimise their risk exposure?

Investors should strike a balance between yields and quality. While income seekers are chasing for higher yields, they should manage the downside risk as well. As such, investors should evaluate the following 3 factors:
- Credit rating: A global bond portfolio comprising of BBB/BB rated bonds can deliver an annual yield of around 6%, with risk level at a controllable range. While the highly speculative bonds with credit ratings of CCC or below can offer an average yield of up to 13.2%, they are subject to a high default risk of 26.4%. This implies that investors are subject to much higher risk in return for higher yields.
- Currency risk: For investors seeking stable return they may consider investing in USD-denominated bonds to minimise foreign currency exposure.
- Investment team: Investors may refer to: 1) the risk management capability of the investment team; 2) their ability to deliver stable return over the long term; and 3) their track record, in order to select the most suitable investment partner.

Speaker Biography

Bruno Lee

Regional Head of Wealth Management
Personal Financial Services, Asia-Pacific
The Hongkong and Shanghai Banking Corporation Limited

Bonnie Lam

Director, Head of Wholesale Business, Asia-Pacific

Bonnie Lam is responsible for developing the wholesale business as well as implementing the sales and marketing strategies of retail fund distribution.

Ms Lam joined HSBC Global Asset Management in 1999 as Associate Director, Retail Business, and was later promoted to Director, Head of Wholesale Business, Asia-Pacific. Prior to joining HSBC, Ms Lam was Vice President of Investment Services at Citibank for the period 1993-1999. She oversaw the retail investment business and was responsible for the formulation and execution of business strategies. She started her career at Gartmore Fund Management Limited.

Ms Lam participates in the industry actively. She is currently an Executive Committee member of the Hong Kong Investment Funds Association and Chairman of the Association's Unit Trust Sub-committee.

Risk Disclosure / Disclaimers

This video is not intended to provide investment advice and does not constitute a solicitation for the making of any deposit or investment product.
The Hongkong and Shanghai Banking Corporation Limited ( the "Bank") neither endorses nor is responsible for the accuracy or reliability of, and under no circumstances will the Bank be liable for any loss or damage caused by reliance on, any opinion, advice or statement made in this video.
The opinions expressed are those of the featured speakers, and except where a speaker is specifically identified as a representative of the Bank, do not represent the Bank's views. The opinions are subject to change without notice and should not be construed as a recommendation of any individual holdings or market sectors.
Investment involves risk, value of investment may move up or down, and may become valueless. The opinions expressed above may vary due to market factors and conditions without further notice. Past performance figures shown are not indicative of future performance. The information contained in this video has not been reviewed in the light of your personal financial circumstances. Reliance upon the information is at your sole discretion. You should carefully consider whether any investment products are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. The relevant product offering documents should be read for further details.
The investment decision is yours but you should not invest in any products unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
This video has not been reviewed by the Securities and Futures Commission of Hong Kong or any regulatory authority in Hong Kong.

Bonds offer potential investment opportunities_Part 1 (9 July 2010)

Transcription Summary

Q: Market volatility spiked on concerns over the European debt crisis posting uncertainty on economic recovery. How would that affect bond markets globally?

It is widely expected the overall debt levels of the European countries are likely to remain high in the foreseeable future. As a result, the prices of government bonds with AAA credit ratings (eg the US, German and UK government bonds) have risen, and the prices of government bonds in the financially vulnerable countries with lower credit ratings such as Greece, Spain and Portugal have fallen.
In the medium to long term, as governments bring their deficits under control, we expect the above trend to improve.

Q: Under the current market condition, which asset classes are expected to outperform?

While economic recovery is underway, the macroeconomic outlook for 2010 remains blurred.
Aggressive interest rate hikes are unlikely for developed markets like the US in the near term. On the contrary, the interest rate hike cycles of emerging markets are expected to be more rapid. However, the impact of the rate hikes on emerging markets should be relatively moderate, given the stronger fundamentals of these markets.
Developed economies are expected to grow at 2% this year, while emerging markets are likely to expand at over 6% on the backdrop of strong domestic demand.
As markets are likely to remain volatile as the structural issues of the developed markets persist, equity investors should diversify their investments to reduce over risks levels.
For conservative investors who seek stable income, they may consider investing in bonds for yield enhancement amid the current low interest rate environment.

Q: Which types of bonds offer better value?

Corporate credits offer better value than government bonds. The run up in investment-grade government bonds and low yields made them considerably less attractive as a medium-term investment.
On the contrary, corporate bonds in general presented more value following the correction in May. Corporate profitability has largely recovered over the past year as a result of the stimulus measures by governments and central banks around the world.
Corporate earnings in the developed and emerging markets are expected to rise that paves the way for a quick turnaround in corporate bonds once the European situation stabilises and economic uncertainty clears.

Speaker Biography

Bruno Lee

Regional Head of Wealth Management
Personal Financial Services, Asia-Pacific
The Hongkong and Shanghai Banking Corporation Limited

Bonnie Lam

Director, Head of Wholesale Business, Asia-Pacific

Bonnie Lam is responsible for developing the wholesale business as well as implementing the sales and marketing strategies of retail fund distribution.

Ms Lam participates in the industry actively. She is currently an Executive Committee member of the Hong Kong Investment Funds Association and Chairman of the Association's Unit Trust Sub-committee.

Risk Disclosure / Disclaimers

This video is not intended to provide investment advice and does not constitute a solicitation for the making of any deposit or investment product.
The Hongkong and Shanghai Banking Corporation Limited ( the "Bank") neither endorses nor is responsible for the accuracy or reliability of, and under no circumstances will the Bank be liable for any loss or damage caused by reliance on, any opinion, advice or statement made in this video.
The opinions expressed are those of the featured speakers, and except where a speaker is specifically identified as a representative of the Bank, do not represent the Bank's views. The opinions are subject to change without notice and should not be construed as a recommendation of any individual holdings or market sectors.
Investment involves risk, value of investment may move up or down, and may become valueless. The opinions expressed above may vary due to market factors and conditions without further notice. Past performance figures shown are not indicative of future performance. The information contained in this video has not been reviewed in the light of your personal financial circumstances. Reliance upon the information is at your sole discretion. You should carefully consider whether any investment products are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. The relevant product offering documents should be read for further details.
The investment decision is yours but you should not invest in any products unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
This video has not been reviewed by the Securities and Futures Commission of Hong Kong or any regulatory authority in Hong Kong.

Will history repeat in US market?_Part 2 (2 July 2010)

Transcription Summary

Q: Given market volatility persisted in the second quarter, what is Standard and Poor's investment outlook for 2H from a fundamental perspective?

From a technical analysis perspective, due to the strength of the May 27 surge in prices, six of nine sector ETFs have already touched or surpassed their first retracement level of 23.6%. We look for the S&P 500 Index to recover to the 1,145 level, a 50% retracement level before clear market direction. However, trading volume is still a cause of concern.
From a fundamental perspective, the S&P 500 Index currently is not trading at an expensive level.

Q: Which sectors do you favour now?

Standard and Poor's is now positive on healthcare and information technology and less bullish on material and utility.
The reason we favour these two sectors is the innovation of new technology products and the long-term demand for new medicine will be suppportative for the sectors.

Speaker Biography

Bruno Lee

Regional Head of Wealth Management
Personal Financial Services, Asia-Pacific
The Hongkong and Shanghai Banking Corporation Limited

Robert Lin

Associate Director, Standard & Poor's Equity Research

Robert is an Associate Director with Standard & Poor's Equity Research. Based in Hong Kong, Robert focuses on information technology and telecom stocks in Asia. Prior to joining Standard & Poor's in 2005, Robert worked for six years as an equity analyst for various companies in Taiwan and Hong Kong, focusing mainly on the TFT LCD and semiconductor sectors.

Robert holds a Bachelor of Business Management Degree from Tamkang University in Taiwan, and a Master of Business Administration Degree from the Wharton School at the University of Pennsylvania.

Risk Disclosure / Disclaimers

This video is not intended to provide investment advice and does not constitute a solicitation for the making of any deposit or investment product.
The Hongkong and Shanghai Banking Corporation Limited ( the "Bank") neither endorses nor is responsible for the accuracy or reliability of, and under no circumstances will the Bank be liable for any loss or damage caused by reliance on, any opinion, advice or statement made in this video.
The opinions expressed are those of the featured speakers, and except where a speaker is specifically identified as a representative of the Bank, do not represent the Bank's views. The opinions are subject to change without notice and should not be construed as a recommendation of any individual holdings or market sectors.
Investment involves risk, value of investment may move up or down, and may become valueless. The opinions expressed above may vary due to market factors and conditions without further notice. Past performance figures shown are not indicative of future performance. The information contained in this video has not been reviewed in the light of your personal financial circumstances. Reliance upon the information is at your sole discretion. You should carefully consider whether any investment products are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. The relevant product offering documents should be read for further details.
The investment decision is yours but you should not invest in any products unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
This video has not been reviewed by the Securities and Futures Commission of Hong Kong or any regulatory authority in Hong Kong.