HSBC: US rate cuts did not lead to excessive market reactions, expecting 6 more rate cuts in the future
HSBC stated that the rate cut by the Federal Reserve last week did not trigger an excessive market reaction. It is expected that there will be 6 rate cuts in the future, each time by 25 basis points, bringing the target range down to 3.25% to 3.5%. Despite the lack of significant fluctuations in investor sentiment due to the rate cut magnitude, HSBC remains cautiously optimistic about the global economic outlook. The head of HSBC Asia-Pacific region pointed out that investors will continue to focus on the return of cash assets and plan to achieve strong asset growth in 2024
According to the Wisdom Financial APP, last week the Federal Reserve's rate cut exceeded market expectations. HSBC stated that the rate cut did not trigger an excessive reaction from investors, but it is expected that there will still be 6 more rate cuts in the future, while maintaining a cautious optimism about the global economic outlook.
Raymond Li, head of wealth management and personal banking investment and wealth management in the Asia-Pacific region at HSBC, stated that investors did not overreact to the Fed's rate cut this time. Investor sentiment did not change significantly whether the rate cut was 25 basis points or 50 basis points. The investment concept of "investing cash and getting returns from cash" will continue for some time. However, as investors had already established certain psychological expectations before the rate cut, this rate cut by the Fed is beneficial for investors to further adjust their deployment plans for cash assets, but it did not cause panic or surprise in the market sentiment. This rate cut indicates a turning point in the interest rate cycle, and the Fed has finally taken action.
Liu Yuchi, head of capital market investment business in the Asia-Pacific region at HSBC Global Private Banking and Wealth Management, stated that there will be more rate cuts in the future. HSBC expects 6 more rate cuts in the future, each time by 25 basis points, lowering the target range of the federal funds rate from the current 4.75%-5% to 3.25%-3.5%. Liu Yuchi mentioned that for the stock market, more consideration will be given to economic expectations, not just the rate cut process, and HSBC still maintains a cautious and optimistic attitude towards the global economic outlook.
Raymond Li mentioned that HSBC manages Asian investment assets totaling $607 billion, achieving a 21% year-on-year growth in asset size in the second quarter of 2024, and strong double-digit growth in returns in the capital markets in the first half of 2024. Wealth management also deploys in various aspects such as financial security, personal planning (such as retirement), and core asset solutions.
Chen Huimei, global and Asia consulting director at HSBC Global Private Banking and Wealth Management, stated that with the popularity of financial technology, banking institutions also focus on the application of technology. HSBC will launch the innovative SmartMatch feature to help customers optimize asset allocation more accurately through technology.
In terms of wealth growth in various regions, Raymond Li noted significant growth in Singapore, with quite a diverse source of assets. HSBC has observed a continuous inflow of assets from some countries in the Asia-Pacific region into Singapore, which has also attracted wealth from Australia and China. It is certain that Singapore is a growing center, but Raymond Li also mentioned that the growth in Hong Kong is equally remarkable