Home / Financial Services/ As Fed rate cut looms, HSBC favours China shares over India

As Fed rate cut looms, HSBC favours China shares over India


Comments / {{hitsCtrl.values.hits}} Views / Friday, 12 July 2019 00:00

Facebook

HONG KONG (Reuters): Analysts at HSBC have moved to endorse Chinese stocks and cooled on Indian shares, in a “less defensive” positioning ahead of a potential interest rate cut from the US Federal Reserve later this month.

Fed Chairman Jerome Powell on Wednesday paved the way for the first US rate cut in a decade, pledging to “act as appropriate” to defend an economic expansion threatened by trade disputes and a global slowdown.

HSBC had downgraded Chinese stocks in May to reflect such risks. But that view reversed along with rising expectations of a Fed cut, which would support ‘cyclical’ markets - those that move in sync with the business cycles.

“In anticipation of Fed cuts, we believe it might be time to become gradually less defensive over the coming months,” Herald van der Linde, HSBC’s head of equity strategy for Asia Pacific, said in a report on Thursday, which moved China to ‘overweight’ from ‘neutral’.

Meanwhile, the bank downgraded Indian shares to ‘neutral’ from ‘overweight’, citing expensive valuations, and that Indian earnings could take a greater knock from trade tensions as “expectations for earnings are much higher” than in China.

Capital inflows from index inclusion of Chinese stocks by the likes of MSCI Inc. and the launch of a Nasdaq-style market – which will begin trading on July 22 – will also support the Chinese market, said HSBC.

Shanghai shares have gained 17% so far this year. But they slid about 7.6% between early May and early June as the US-China trade war re-escalated.

 


Share This Article

Facebook Twitter


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

Tea with NM

Saturday, 20 July 2019

One of my most treasured memories is that of NM, better known as Dr. N.M. Perera. It was when I was a student in the UK that I first met him. NM was already a formidable left leader in Sri Lanka, an accomplished parliamentarian, a larger-than-life fi


Biosphere will one day be replaced by technosphere

Saturday, 20 July 2019

I am now nearly 90 and in my lifetime I have seen and heard the world changing so fast that homo sapiens (Latin: “wise man”), the species to which all modern human beings belong, are changing into a technology-dependent sub species, . Homo sapien


Expand employer-backed childcare to close the gender gap in Sri Lanka

Friday, 19 July 2019

In Sri Lanka, women’s formal workforce participation is at only 36%, compared with 75% for men. Sri Lanka could raise its gross domestic product by as much as 20% in the long-run by closing the gender gap in the workforce, according to one estimate


Who should be our next president?

Friday, 19 July 2019

After the recent terrorist attacks and the subsequent violence unleashed against innocent Muslims by racists, Sri Lankans are searching for a leader who can save the country. Many have lost faith in the leaders, due to the breakdown in the security a


Columnists More