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Monthly View - December 2025

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We trim our US equity overweight, broaden our Asia exposure and add to hedge funds - Monthly View - December 2025

by Willem Sels, Global Chief Investment Officer, HSBC Private Bank and Premier Wealth
Nov 13, 2025

  • We remain positive on US equities and US tech, as AI adoption and monetisation should accelerate. Earnings growth should remain strong and broaden in 2026. So we don’t believe US stocks are in a bubble
  • That said, there are some obstacles that could create mild volatility. The December Fed rate cut could be its last one in this cycle; immigration reforms could weigh on job creation or create bottle-necks in the build-out of AI; and the huge need for more electricity could become another concern
  • None of these are sufficient to end the US bull market. But they warrant a trim of US stocks to a smaller overweight, given the concentration of US stocks in global indices
  • The other reason for our changes is the strengthening Asia pull factor. We already have an overweight on mainland China, Hong Kong and Singapore stocks. This month, we add South Korea to our overweights because of tech-related upside and strong earnings expectations in 2026. We also move Japanese stocks to overweight due to the expansionary agenda of the new Prime Minister. Both countries have seen easing of trade tensions and have a shareholder focus, so we foresee further upside
  • In the bond market, we have upgraded Chinese local currency and Mexican hard currency bonds from underweight to neutral. We much prefer EM LC, EM Corporate and DM Investment grade over High Yield
  • We’ve also added to our Hedge Funds exposure to further diversify portfolios

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