Halister News

(Bloomberg) -- HSBC raised allocation to cash and fixed income to 78% vs 76% last month, saying the former is the best way to diversify in today’s world of low bond yields, analysts led by global head of asset allocation, Fredrik Nerbrand, write in a note.

• Favors holding cash in USD rather than in negatively yielding EUR, CHF and JPY
• Populist politics will bring to an end the idea that monetary policy can influence the global economy by itself and fiscal policy will start to take center stage while growth will stay weak
• Investors may start to believe asset markets are no longer the key focus of unconventional easing policies in DM, which poses a risk for the equity bull market
• In USTs, position for steeper curves
  • Lifts portfolio weight in 2Y-5Y tenors by 1% to 5%, 7Y to 10Y by 6% to 8% and cuts the weighting for the 10Y and beyond sector by 7% to 15%, on a 6 month view
• Lifts IG by 4% to 6% and cuts HY by 5% to 5%, closes position in global equities and raises S&P 500 weighting by 3% to 3%; lifts overall exposure to stocks to 12% vs 10%
• Weighting in gold reduced by 4% to 6% after a disappointing performance since June
• The best assets can be sourced from EM debt at the moment; so increase exposure to EM debt in local currency, adding 2% to India and Indonesia 10Y positions and take on a Brazilian Real currency exposure, by rotating 2% position in Brazil 10Y USD debt to Brazil 10Y local currency debt