HSBC Eyes Asia and Quality Credit for 2026 Growth

HSBC Global Private Banking expects 2026 to beryllium shaped by resilient recognition markets, accelerating Asian innovation, and an expanding planetary AI infrastructure portion urging investors to enactment diversified and brace for volatility.

Speaking astatine the bank’s yearly Investment Outlook media briefing, Willem Sels, planetary main concern serviceman for backstage banking and wealth, said that contempt concerns implicit imaginable “credit stress,” the information tells a much benign story. “Bank indebtedness provisioning has not truly substantially increased,” helium said, citing Federal Reserve figures. “Some US banks adjacent chopped their provisioning, oregon said it was much benign than expected. That’s partially due to the fact that of interest-rate cuts, and partially due to the fact that of a resilient economy.”

Credit: Favouring Quality While Avoiding High Yield

Sels said the slope is holding a wide underweight connected high-yield bonds. “When you representation high-yield spreads with default rates which should stay benign, radical are inactive not adequately compensated,” helium explained. “We would alternatively beryllium successful large credit.”

HSBC continues to favour investment-grade bonds portion becoming much optimistic astir emerging-market debt, peculiarly local-currency bonds. These, according to Sels, assistance investors "diversify that US-dollar exposure," peculiarly those chiefly invested successful US shares.

Asia: The Innovation Powerhouse

Fan Cheuk Wan, main concern serviceman for Asia, underlined Asia’s presumption arsenic a planetary exertion and AI hub. “Asia is the world’s exertion hardware powerhouse,” she said. In the 2025 Global Innovation Index, she noted, “South Korea is rated fourth, followed by Singapore. China stands astatine ten, Japan astatine twelve, and Hong Kong astatine fifteen.”

HSBC is maintaining a “barbell strategy” successful Asia focusing connected innovation leaders specified arsenic Korea, China, Singapore, Japan and Hong Kong connected 1 end, and income-generating assets connected the other.

Fan highlighted the roar successful AI-driven infrastructure. Data-centre build-out successful Asia is projected to turn astatine 13% annually done 2030, acold outpacing the US (9%) and Europe (5%). “This is driven by beardown authorities support, competitory energy prices, onshore availability and manufacturing proximity,” she said. “It underpins recently rising maturation opportunities successful the Asian tech sector.”

Valuations, Earnings and Structural Reform

Corporate governance reforms successful markets specified arsenic Japan and South Korea are strengthening shareholder returns done rising buybacks and dividend payouts. Earnings momentum besides remains beardown crossed the region: emerging Asia is forecast to present 20% net maturation successful 2026.