Global equity market rally continues

Transcription

1 Investment Monthly Publication PUBLIC date: February 5th, 2018 Global equity market rally continues This document contains the views of HSBC Global Asset Management and is distributed by HSBC Investment Funds (Canada) Inc., HSBC Private Wealth Services (Canada) Inc., and the HSBC InvestDirect division within HSBC Securities (Canada) Inc., each of which are subsidiaries of HSBC Bank Canada. This commentary provides a high level overview of the recent economic environment, and is for information purposes only. It is a marketing communication and does not constitute investment advice or a recommendation to any reader of this content to buy or sell investments nor should it be regarded as investment research. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination. Key takeaways Global equities remain relatively attractive even after 2017 rally We remain overweight global equities and local-currency emerging market (EM) government bonds. We also retain our underweight stance on developed market (DM) government bonds, and global investment grade (IG) and high-yield (HY) corporate bonds Global equities surged higher in January on optimism over the global growth outlook and amid upbeat corporate earnings releases. The US dollar and Treasuries sold off The US government avoided a lengthy shutdown in January as Congress passed a continuing resolution which extends funding until 8 February At the European Central Bank (ECB) January policy meeting, ECB President Mario Draghi stated that recent economic strength further boosted the bank's confidence that inflation would return to target China's GDP growth is likely to moderate this year after a robust 2017 and amid tighter credit/financial conditions, but will remain supported by upbeat global demand Global equities were the clear outperformer in Despite this, our measure of sustainable returns in this asset class has not meaningfully compressed. With global economic growth momentum remaining robust and profit shares still high, we think there is still a strong case for equities relative to competing asset classes. In DM, the best relative rewards are still in Japan and the eurozone. Meanwhile, inflation remains historically subdued relative to growth and labour market trends and below central bank targets. Nevertheless, cyclical pressures are now beginning to build, especially in the US. Even in Europe, the ECB struck a hawkish tone at its January policy meeting, stating that recent economic strength has boosted the bank s confidence that inflation would return to target. Overall, at current stretched valuations in a bond-unfriendly environment, we remain underweight DM government and corporate bonds. Finally, given solid EM macro momentum and high prospective returns, we have a preference for EM equities within our multi-asset portfolios, particularly in Asia, whilst selective parts of EM local currency government debt also remain attractive to us. 1

2 Equities Asset class View View Move Global OW US N UK N Eurozone OW Japan OW Emerging Markets (EM) OW Asia ex Japan OW CEE & Latam N Corporate bonds Asset class View View Move Global investment grade (IG) UW USD IG UW EUR and GBP IG UW Asia N Global high-yield UW US UW Europe UW Asia N Government bonds Asset class View View Move Developed Market (DM) UW US UW UK UW Eurozone UW Other Asset class View View Move EM agg bond (USD) UW Gold N Other commodities N Real estate N Japan UW EM (local currency) OW Source: HSBC Global Asset Management as of Jan 31, Long-term asset class positioning (>12 months) Basis of Views and Definitions of Long term Asset class positioning tables Views are based on regional HSBC Global Asset Management Asset Allocation meetings held throughout January 2018, HSBC Global Asset Management s long-term expected return forecasts which were generated as at 29 December 2017, our portfolio optimisation process and actual portfolio positions. Icons: View on this asset class has been upgraded No change View on this asset class has been downgraded Underweight, overweight and neutral classifications are the high-level asset allocations tilts applied in diversified, typically multi-asset portfolios, which reflect a combination of our long-term valuation signals, our shorter-term cyclical views and actual positioning in portfolios. The views are expressed with reference to global portfolios. However, individual portfolio positions may vary according to mandate, benchmark, risk profile and the availability and riskiness of individual asset classes in different regions. Overweight implies that, within the context of a well-diversified typically multi-asset portfolio, and relative to relevant internal or external benchmarks, HSBC Global Asset Management has (or would have) a positive tilt towards the asset class. Underweight implies that, within the context of a well-diversified typically multi-asset portfolio, and relative to relevant internal or external benchmarks, HSBC Global Asset Management has (or would) have a negative tilt towards the asset class. Neutral implies that, within the context of a well-diversified typically multi-asset portfolio, and relative to relevant internal or external benchmarks HSBC Global Asset Management has (or would have) neither a particularly negative or positive tilt towards the asset class For global investment-grade corporate bonds, the underweight, overweight and neutral categories for the asset class at the aggregate level are also based on high-level asset allocation considerations applied in diversified, typically multi-asset portfolios. However, USD investment-grade corporate bonds and EUR and GBP investment-grade corporate bonds are determined relative to the global investment-grade corporate bond universe. 2

3 Equities Asset class View Movement Rationale Global Overweight Rationale of overweight views: Global economic growth momentum remains solid, driving global equity markets to deliver positive returns over the long term. Overall, support from still loose monetary policy and fiscal policy (if needed) will, in the medium and longer term, likely outweigh any headwinds from more modest Chinese growth, monetary policy normalisation in DM economies, and political uncertainty in many regions. Risks to consider: Fairly narrow implied equity premia (excess return over cash) limit the ability of the market to absorb bad news. Episodic volatility may be triggered by concerns surrounding Chinese growth, US economic policy, and/or a potentially more rapid than expected US Federal Reserve (Fed), ECB or Bank of Japan (BoJ) normalisation of policy, coupled with political risks. A notable and persistent deterioration of the global economic outlook could also dampen our view. US Neutral Positive factors: US profits data has shown improvement amid a broadly robust economic backdrop. Tax reform presents an upside risk to earnings. US equities have also been resilient in the face of Fed policy normalisation and supported by historically low volatility. Overall, our measure of the implied risk premium (excess returns over cash) remains consistent with a neutral positioning. Risks to consider: The magnitude of the boost to GDP growth from tax reform is likely to be small given where we are in the cycle. Relatively high current valuations lead to an implied risk premium that is lower than in many other DM economies. A more rapid than expected tightening of Fed policy also poses risks Canada Modestly overweight Rationale for overweight views: Moderate but sustainable macro indicators (driven by improving global economic growth and still accommodative monetary policy) should enable commodity price stability and earnings growth to resume. Domestic equity valuations are reasonable and show potential for positive absolute and favourable relative-return opportunities over the medium term. Thus, a modestly overweight position in Canadian equities appears to be appropriate at this time. Risks to consider: Disappointing global growth, a less dramatic tightening in monetary policy, geopolitical concerns and a resumption in commodity price weakness would put pressure on domestic employment trends and corporate profits, resulting in compressed earnings estimates and higher risk premiums. UK Neutral Positive factors: Major UK equity indices are heavily weighted to financial and resource stocks which should benefit from higher commodity prices and rising interest rates. Overall, however, current valuations are consistent with a neutral positioning, in our view. Risks to consider: The prospective reward for bearing equity risk in the UK is relatively low compared to other markets. The UK economy is underperforming amid inflationary pressures and Brexit-related uncertainty. Eurozone Overweight Rationale of overweight views: Eurozone equities benefit from relatively high implied risk premia and scope for better earnings news given the region s earlier point in the activity cycle. Ultra-low ECB policy interest rates are likely to persist until the end of the decade. Risks to consider: Valuations have become less attractive following the rally over the last year. Political risks also remain amid looming Italian general elections, lingering tensions in Spain (Catalonia) and Brexit-related uncertainty. A weaker UK economy may dent exports to a significant trading partner. ECB monetary policy may also be less accommodative than expected. Japan Overweight Rationale of overweight views: Relative valuations and risk premiums are attractive, in our view, whilst the Bank of Japan s (BoJ) very loose monetary policy and the government s recent fiscal stimulus may boost earnings. Large corporate cash reserves provide firms with the scope to boost dividends or engage in stock repurchases. Earnings momentum remains positive. Risks to consider: Although there has been a pick-up in investment, domestic economic fundamentals are relatively sluggish. Emerging Markets Overweight Rationale of overweight views: EM economic growth momentum continues to look good (EM) (especially relative to stable growth in DM). Based on current pricing, we also think there is still significant potential for (selected) EM currencies to appreciate over the medium term. Unhedged exposures to EM Asia offer the best risk-adjusted rewards, in our view. Risks to consider: There could be some near-term volatility as worries persist around the uncertain path for future Fed tightening, the potential for increased trade protectionism, economic transition in China, and the robustness of the global economy as a whole. Geopolitical uncertainty also poses risks. Asia ex Japan Overweight Rationale of overweight views: We think Asia ex Japan equities have particularly attractive risk adjusted returns and a reasonable margin of safety in current valuations should a less favourable macro backdrop emerge. Asian currencies are also poised to appreciate in the medium term. Risks to consider: A sharp rise in Treasury yields is a key risk. DM central bank policy normalisation could raise uncertainty. Other risks include US protectionist policies; geopolitical events; commodity-price and/or currency volatility; a fragile or faltering global growth recovery; and renewed concerns about China s growth, policy and financial risks. CEE & Latam Neutral Positive factors: Brazil exited recession in Q and has embarked on an ambitious reform agenda, whilst Mexico s economy is resilient. We believe Poland, Russia and Hungary offer attractive risk premiums. Risks to consider: Geopolitical tensions are high and unpredictable. High local cash rates and sovereign yields in many countries diminish the case for bearing equity risk. Past performance is not an indication of future returns. 3

4 Government bonds Asset class View Movement Rationale Developed Markets (DM) Underweight Rationale of underweight views: Prospective returns still look low relative to competing asset classes. In a bond-unfriendly environment (strong global activity, the risk of cyclical inflationary pressures, and gradual DM central bank policy normalisation), global bond yields could move higher still. Positive factors: Government bonds still provide diversification benefits and reduce volatility within our multi-asset portfolios. Meanwhile, secular stagnation forces are powerful (ageing populations, low productivity and investment), and the global pool of safety assets is limited. US Underweight Rationale of underweight views: The US labour market is at (or close to) full employment so underlying inflationary pressures may build, especially following tax reform. In addition, prospective returns still look low relative to competing asset classes. Positive factors: Today s environment of price stability means that the term premium (compensation for bearing duration risk) may be capped at a lower level than historically. We think 10-year Treasuries offer a reasonable way to diversify portfolios at not too high a cost. Canada Underweight Rationale for underweight views: Many key central banks including the Fed, the Bank of England and even the ECB have signalled that global policy rates will likely be moving higher in concert following years of aggressive, co-ordinated monetary stimulus. Similarly, the Bank of Canada has raised rates 75 basis points in the last six months and has indicated that further tightening of monetary policy may be warranted by the improving economic backdrop, but ongoing risks to their outlook will require a gradual approach to further hikes. In the last month, improving wage and inflation trends have led to higher yields in the global bond market, with Canada experiencing higher yields, a flatter yield curve and a slightly stronger currency. That said, the increasing evidence of a more universal global expansion continues to provide a positive backdrop for equity markets and challenging outlook for government fixed income assets going forward. The Government of Canada 10-year yield, considered to be a proxy for the overall government bond market, traded within a 75 basis point range (~1.40%-2.15%) in 2017 and is currently trading at its upper end of its 2017 range. Thus, current valuations in government bonds are more attractive than they were early this year but our medium-term outlook continues to expect yield levels to move higher. Therefore, we have maintained our underweight view on Canadian government bonds and have maintained our preference for corporate bonds. Positive factors: If Canadian growth disappoints, more accommodative monetary policy may prove supportive for this asset class. Periods of risk aversion and flight to liquidity may also prove to be supportive. In addition, government bonds continue to offer a diversification element important in a volatile environment. UK Underweight Rationale of underweight views: Although the UK economy could continue to underperform amid Brexit uncertainty, boosting safe-haven demand for gilts, we think current valuations are extreme. Positive factors: Amid downside risks to growth, UK monetary policy is likely to remain accommodative for a longer period. Eurozone Underweight Rationale of underweight views: Similarly, core European bonds are overvalued, in our view. A key risk is the eventual termination of ECB asset purchases. Positive factors: Core inflationary pressures in the region remain subdued, which should keep accommodative monetary policy in place for an extended period of time. Japan Underweight Rationale of underweight views: Japanese government bonds (JGBs) are overvalued, in our view. The BoJ has also recently reduced the amount of its JGB purchases and could modify its yield targeting framework. Positive factors: The Yield Curve Control framework should limit volatility and reduce the risk of significantly higher yields in the near term. Emerging markets (EM) Overweight Rationale of overweight views: Despite the recent strong performance, most countries still offer high prospective returns, especially relative to the opportunity set. Our estimate of the sustainable return on EM currencies reinforces our choice to hold this position unhedged. Risks to consider: A more aggressive than expected tightening of Fed policy and weaker global growth momentum. Diverging economic and political regimes in the EM universe mean that being selective is key. Corporate bonds Asset class View Movement Rationale Global investment grade (IG) Underweight Rationale of underweight views: Low implied credit premiums mean that the margin of safety against negative shocks, such as a slight deterioration in the data or default outlook, is very thin. Given current pricing, we think there are better opportunities in other risky asset classes e.g. equities. We also prefer government bonds to IG credits as a portfolio diversifier. Positive factors: The macro environment remains supportive for credits implied recession probabilities are near zero. The risk of defaults and downgrades appear limited for now. USD investment Underweight Rationale of underweight views: Apart from low implied credit premiums, the duration of grade US IG corporate bonds a measure of their sensitivity to shifts in underlying interest rates is at record highs, making them vulnerable to a more aggressive pace of Fed tightening. Positive factors: US investment grade debt looks more attractive to us than European credit. Past performance is not an indication of future returns. 4

5 EUR and GBP investment grade PUBLIC Underweight Rationale of underweight views: Alongside a compressed credit risk premium, EUR IG prospective returns are also weighed down by a negative duration risk premium i.e. we are being penalised for bearing interest-rate risk. Positive factors: For the time being, the ECB s corporate bond-buying programme remains supportive. Default rates also remain low. Asia IG Neutral Positive factors: Within the IG universe, the carry offered by Asian credits looks attractive relative to DM. Our measure of the implied credit risk premium is also relatively high. Accelerating underlying activity in EM Asia and a neutral monetary policy stance in most countries are also supportive. Risks to consider: A more aggressive than expected Fed policy normalisation poses a key risk, particularly for corporates who borrow in US dollars. Risks from rising protectionism cannot be ignored either, while the extent of Chinese leverage remains a long-term issue. Global high-yield Underweight Rationale of underweight views: Our measure of implied high-yield (HY) credit risk premiums (compensation for bearing credit risk) are low. Our measures show we are better rewarded by equities as a way to benefit from a strong economic backdrop. Positive factors: HY bonds are more exposed to growth than to interest rate risk. Corporate fundamentals are improving following a pick-up in the global activity cycle, and defaults are low. We prefer higher-rated HY bonds. US HY Underweight Rationale of underweight views: The recent compression of credit risk premiums makes US HY credits even more vulnerable to even a slight deterioration in the data or default outlook. A sustained fall in commodity prices and a more aggressive Fed tightening cycle all pose risks. Positive factors: Broad-based strength in US economic activity continues to support corporate fundamentals. Tax reforms will also help. Default rates are relatively low. HY bonds also have a shorter effective duration, making them more exposed to growth than to interest rate risk. Europe HY Underweight Rationale of underweight views: The carry offered in Euro HY has declined in 2017 and now looks less attractive when compared to European equities. The ECB APP, which has so far been positive for this asset class, is likely to be terminated by Overall, our measure of prospective risk-adjusted returns in EUR HY is consistent with an underweight positioning. Positive factors: The robust eurozone recovery, coupled with spill-over effects from the ECB Asset Purchase Programme (APP) remain supportive. The default outlook also looks benign. Asia HY Neutral Positive factors: The carry offered by Asian High Yield looks attractive to us given the alternatives, with relatively high prospective risk-adjusted returns. Economic momentum continues to build and inflationary pressures appear to have mostly stabilised. Risks to consider: A Fed error in its normalisation of monetary policy poses a key risk, particularly for corporates who borrow in US dollars. Risks from rising protectionism cannot be ignored either, while the extent of Chinese leverage remains a long-term issue. Others Asset class View Movement Rationale EM agg bond (USD) Underweight Rationale of underweight views: Dollar-denominated EM bonds have performed well over Consequently, prospective risk-adjusted returns now look poor relative to the opportunity set. The risk of a more hawkish Fed and stronger USD poses a significant risk to USD-denominated debt holdings in the EM universe. USD debt leverage is high in some economies. Positive factors: Investors reach for yield may continue to support EM hard-currency bonds. Gold Neutral Positive factors: Gold futures can offer reasonable diversification benefits to our multi-asset portfolios and have some inflation-hedging characteristics. Risks to consider: Based on our expected returns framework, prospective returns on gold futures look poor today given current market pricing. This is due to the large negative expected roll yield (the cost of renewing futures contracts) and a negative expected spot price return. Other commodities Neutral Positive factors: Commodity futures can offer reasonable diversification benefits to our multi-asset portfolios and have some inflation-hedging characteristics. Risks to consider: Based on our expected returns framework, prospective returns on commodity futures look poor today given current market pricing. This is primarily because there is a large negative expected roll yield (the cost of renewing futures contracts). Real estate Neutral Positive factors: Based on our dividend growth assumptions and current yields, which offer a premium of over 1.5% points above the dividend yield from wider equities, we believe real estate equities are priced to deliver reasonably attractive long-run returns compared to developed-marked government bonds. In the long run, rents are positively related to wider economic growth and offer a partial inflation hedge. Risks to consider: The US has underperformed other listed property markets over the last 12 months in USD terms. Concerns over the health of some retailers have dragged down retail-oriented Real Estate Investment Trusts although recent takeover activity has boosted the prices of some stocks owning high-quality malls. US office markets, such as New York and Washington, are suffering from excess supply. The UK's decision to leave the EU has reduced rental growth prospects in central London and increased uncertainty around future occupier demand in the UK. Past performance is not an indication of future returns. 5

6 Global equity market rally continues Markets: global equities surged higher in January; US Treasuries declined as market priced in more aggressive Fed Global equities surged higher in January on optimism over the global growth outlook and amid upbeat corporate earnings releases. The MSCI AC World Index closed 4.1% higher over the month, with US and EM markets outperforming Meanwhile, US Treasuries sold off (yields rose) amid heightened risk appetite and as the market priced in a higher probability of a near-term Fed rate hike. Core European government bonds also fell as upbeat data boosted expectations of tighter ECB policy Finally, crude oil prices extended recent gains in January, supported by a weaker US dollar and a decline in US crude inventories over the month (all data above as of close of 31 January in local currency, price return, month-to-date terms) US: lengthy shutdown avoided, but only temporarily The government avoided a lengthy shutdown in January as Congress passed a continuing resolution which extends funding until 8 February. A long-term budget bill is still desirable before the debate over the debt ceiling resurfaces President Donald Trump expressed his willingness to renegotiate US membership of the Trans Pacific Partnership. However, he also raised tariffs on imported solar panels and washing machines. This is expected to hit Chinese and South Korean exporters Q4 GDP rose 2.6% qoq annualised, bringing the overall growth for 2017 to 2.5%, in line with the Fed's forecast. Core PCE for December came in at 1.5% yoy, also in line consensus expectations and the previous print The Fed left interest rates unchanged in January. Looking ahead, there is a strong likelihood of a rate hike in March given continued strong economic activity, gradually rising inflation and still loose financial conditions Europe: ECB signals possibility of QE exit in September; Brexit continues to weigh on UK activity According to survey data, the eurozone is enjoying one of the strongest periods of expansion in its history. Positively, in 2018, there are upside risks to investment growth, whilst consumption is likely to remain solid as the labour market continues to tighten At the ECB January policy meeting, ECB President Mario Draghi stated that recent economic strength further boosted the bank's confidence that inflation would return to target. He also confirmed the possibility that asset purchases could end in September Our Nowcasts show the UK continuing to trail other advanced-economy peers. Nevertheless, the Bank of England may raise interest rates again this year as inflation remains above target whilst a tight labour market could see wage growth edge higher Asia: Chinese economic growth likely to moderate in 2018; BoJ policy on hold amid downside risks to inflation outlook China's GDP growth is likely to moderate this year after a robust 2017, amid tighter credit/financial conditions and smaller fiscal stimulus, but remains supported by stable consumption growth, upbeat global demand, and improved corporate fundamentals In the fiscal year to end-march 2019 (FY19) budget, the Indian government announced a corporate income tax rate cut for companies with revenues up to INR2.5bn, some tax relief to salaried workers and an increase in infrastructure spending In Japan, policy was left unchanged at the BoJ January meeting. Policymakers acknowledged the recent pickup in inflation but that it was mainly due to energy prices and base effects and argued the balance of risks to prices was still tilted to the downside Our Nowcasts show the UK continuing to trail other advanced-economy peers. Nevertheless, the Bank of England may raise interest rates again this year as inflation remains above target whilst a tight labour market could see wage growth edge higher Other EM: higher commodity prices and US dollar weakness boosts prospects Brazil's Supreme Court upheld charges against former president Lula, which dims the prospect of him participating in elections later this year. Positively, November industrial production and retail sales rose strongly, beating expectations Mexico's economy expanded by 1.0% qoq in Q4, having contracting 0.3% qoq in Q3 due to natural disasters. The sixth round of NAFTA negotiation concluded with some progress, although core issues remain unresolved South African government bonds rallied after the central bank voted 5-1 to maintain policy rates at 6.75%, with one dissenter opting for a cut. Together with subsiding inflation risks, the possibility of a rate cut in the near-term has arguably increased The recent rise in oil prices is expected to boost Russia's economy and terms of trade, but the political news flow has been quite negative. Most recently, US Treasury Secretary Steven Mnuchin signalled that there could more US sanctions in the future Past performance is not an indication of future returns 6

7 Market Data Equity Indices World Close MTD 3M YTD MSCI AC World Index (USD) North America US Dow Jones Industrial Average 26, ,617 19, US S&P 500 Index 2, ,873 2, US NASDAQ Composite Index 7, ,506 5, Canada S&P/TSX Composite Index 15, ,421 14, Europe MSCI AC Europe (USD) Euro STOXX 50 Index 3, ,709 3, UK FTSE 100 Index 7, ,793 7, Germany DAX Index* 13, ,597 11, France CAC-40 Index 5, ,567 4, Spain IBEX 35 Index 10, ,184 9, Asia Pacific MSCI AC Asia Pacific ex Japan (USD) Japan Nikkei-225 Stock Average 23, ,129 18, Australian Stock Exchange 200 6, ,150 5, Hong Kong Hang Seng Index 32, ,484 22, Shanghai Stock Exchange Composite Index 3, ,587 3, Hang Seng China Enterprises Index 13, ,963 9, Taiwan TAIEX Index 11, ,270 9, Korea KOSPI Index 2, ,607 2, India SENSEX 30 Index 35, ,444 27, Indonesia Jakarta Stock Price Index 6, ,686 5, Malaysia Kuala Lumpur Composite Index 1, ,873 1, Philippines Stock Exchange PSE Index 8, ,078 7, Singapore FTSE Straits Times Index 3, ,612 3, Thailand SET Index 1, ,848 1, Latam Argentina Merval Index 34, ,335 18, Brazil Bovespa Index* 84, ,213 60, Chile IPSA Index 5, ,890 4, Colombia COLCAP Index 1, ,598 1, Mexico Index 50, ,772 46, EEMEA Russia MICEX Index 2, ,328 1, South Africa JSE Index 59, ,777 50, Turkey ISE 100 Index* 119, ,532 86, *Indices expressed as total returns. All others are price returns. 52- week High 52- week Low Fwd P/E (X) 7

8 Market Data (continued) Equity Indices - Total Return 3-month YTD 3-year 5-year Global equities US equities Europe equities Asia Pacific ex Japan equities Japan equities Latam equities Emerging Markets equities All total returns quoted in USD terms. Data sourced from MSCI AC World Total Return Index, MSCI USA Total Return Index, MSCI AC Europe Total Return Index, MSCI AC Asia Pacific ex Japan Total Return Index, MSCI Japan Total Return Index, MSCI Latam Total Return Index and MSCI Emerging Markets Total Return Index. Bond indices - Total Return Close MTD 3-month YTD BarCap GlobalAgg (Hedged in USD) JPM EMBI Global BarCap US Corporate Index (USD) 2, BarCap Euro Corporate Index (Eur) BarCap Global High Yield (Hedged in USD) Markit iboxx Asia ex-japan Bond Index (USD) Markit iboxx Asia ex-japan High-Yield Bond Index (USD) Total return includes income from dividends and interest as well as appreciation or depreciation in the price of an asset over the given period Bonds US Treasury yields (%) Close End of last mth. 3-months Ago Ago Year End Month Year Year Year Year Developed market 10-year bond yields (%) Japan UK Germany France Italy Spain Past performance is not an indication of future returns. 8

9 Market Data (continued) Currencies (vs USD) Developed markets Latest End of last mth. 3-mths Ago Ago Year End week High 52-week Low EUR/USD GBP/USD CHF/USD CAD JPY AUD NZD Asia HKD CNY INR MYR KRW 1,068 1,067 1,120 1,161 1,067 1,161 1,058 TWD Latam BRL COP 2,831 2,986 3,042 2,923 2,986 3,103 2,760 MXN EEMEA RUB ZAR TRY MTD 3-month YTD 52-week 52-week Commodities Latest High Low Gold 1, ,366 1,195 Brent Oil WTI Crude Oil R/J CRB Futures Index LME Copper 7, ,313 5,463 Past performance is not an indication of future returns. 9

10 Important information PUBLIC This document has been prepared by HSBC Global Asset Management Limited (AMG) and is distributed by HSBC Investment Funds (Canada) Inc. (HIFC), HSBC Private Wealth Services (Canada) Inc. (HPWS), and the HSBC InvestDirect division within HSBC Securities (Canada) Inc. (HIDC) ( we refers to AMG, HIFC, HPWS, and HIDC collectively). The contents of this document may not be reproduced or further distributed to any person or entity, whether in whole or in part, for any purpose or otherwise, without the prior written permission of AMG. All non-authorised reproduction or use of this document will be the responsibility of the user and may lead to legal proceedings. The material contained in this document is for general information purposes only and does not constitute advice or a recommendation to buy or sell investments. Some of the statements contained in this document may be considered forward-looking statements which provide current expectations or forecasts of future events. Such forward-looking statements are not guarantees of future performance or events and involve risks and uncertainties. Actual results may differ materially from those described in such forward-looking statements as a result of various factors. We do not undertake any obligation to update the forward-looking statements contained herein, or to update the reasons why actual results could differ from those projected in the forward-looking statements. This document has no contractual value and is not by any means intended as a solicitation, nor a recommendation for the purchase or sale of any financial instrument in any jurisdiction in which such an offer is not lawful. The views and opinions expressed herein are those of AMG at the time of preparation, and are subject to change at any time. 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