HSBC Eyes Asia and Quality Credit for 2026 Growth

Core Insights - HSBC Global Private Banking anticipates that 2026 will be influenced by resilient credit markets, accelerating innovation in Asia, and an expanding global AI infrastructure while advising investors to maintain diversification and prepare for volatility [1] Credit Market Outlook - Despite concerns regarding potential "credit stress," data indicates a more favorable scenario with bank loan provisioning remaining stable or even decreasing in some US banks, attributed to interest rate cuts and a resilient economy [2] - HSBC is underweight on high-yield bonds, preferring investment-grade bonds and showing increased optimism towards emerging-market debt, particularly local-currency bonds to diversify US-dollar exposure [3] Asian Market Dynamics - Asia is positioned as a global technology and AI hub, with countries like South Korea, Singapore, China, Japan, and Hong Kong ranking high in the 2025 Global Innovation Index [4] - HSBC employs a "barbell strategy" in Asia, focusing on innovation leaders and income-generating assets [4] AI Infrastructure Growth - The growth of AI-driven infrastructure in Asia is projected at 13% annually through 2030, surpassing growth rates in the US (9%) and Europe (5%), driven by government support, competitive electricity prices, and proximity to manufacturing [5] - Corporate governance reforms in Japan and South Korea are enhancing shareholder returns through increased buybacks and dividends, with emerging Asia expected to achieve 20% earnings growth in 2026 [5]