emd: beyond the cover story · emd: beyond the cover story this presentation is intended for...
Post on 13-Jul-2020
6 Views
Preview:
TRANSCRIPT
Nishant Upadhyay, Head of Emerging Market Debt
16 September 2016
EMD: Beyond the cover story
This presentation is intended for Professional Clients only and should not be distributed
to or relied upon by Retail Clients. The information contained in this publication is not
intended as investment advice or recommendation. Non contractual document
2
Summary
EMD: Investment team
What is our outlook for EMD?
EMD: HSBC’s product offering
EMD Total Return Strategy
Appendix (Asia)
Important Information
EMD: Investment team
4
Meet the EMD investment team
Nishant UpadhyayHead of the Global EMD team
Olga Yangol, CFA, FRM,
CAIAPortfolio manager
Local Markets
Bill LangPortfolio manager
Local Debt and Currency Strategies
Vinayak Potti, CFA Portfolio manager
Total Return strategies
Binqi LiuPortfolio manager
Local Markets
Jaymeson Kumm, CFAPortfolio manager
Hard Currency
Non contractual document
5
EMD: Full platform
1. Christina Ronac reports functionally to Rick Deutsch, Global Head of Credit Research and locally to Nishant Upadhyay, Head of Global Emerging Markets Debt.
2. Covers both developed and emerging market companies
3. Employees of HSBC Jintrust
4. Not an exhaustive list of members
5. Macro investment strategists
Source: HSBC Global Asset Management, as of September 07, 2016.
EMD Credit Research Analysts
London
Cagdas Hatinoglu2
Mumbai
Anitha Rangan
Aswin Kumar
Mexico City
Juan Pablo Arizaleta
Pablo San Jose
Buenos Aires
Maria Jose Luisi
Hernan Torre
New York
Christina Ronac1
Tatiana Brikulskaya
Dusseldorf
Frank Joachim2
Hong Kong
Elizabeth Allen
Wilson Yip
Seok Poh Yeoh
Jaywon Jung
Alex Choi
Tony Xiao
Kingston Lam
Shanghai3
Rollin Cai
William Fan
Wang Zhaoyi
Product Management
Brian Dunnett
Head of Product Specialists
Amanda LaMarca
Senior Product Specialist
Global EMD Portfolio Management Team
Nishant Upadhyay
Head of Global Emerging Markets Debt
Portfolio Engineering
Hugo Novaro
Head of Portfolio Engineering
Trading, Risk Management
Adolfo Cheong
Risk Management
Michael Cropano
Trading
Christian Daniello
Trading
Scott Davis
Trading
Portfolio Management
Billy Lang
Portfolio Manager / Local Markets
Binqi Liu
Portfolio Manager / Local Markets
Jaymeson Kumm
Portfolio Manager / External
Corporates
Vinayak Potti
Portfolio Manager / Total Return
Olga Yangol
Portfolio Manager / Local Markets
Credit Research
Christina Ronac1
Head of EMD Credit Research
Tatiana Brikulskaya
Credit Research Analyst
Global Investment Strategy5
(Coverage)
10+ Professionals
David Semmens (Global & US)
Marcus Sonntag (Global & Europe)
Rabia Bhopal (Global & Frontier)
Sam Pham (Global)
Hussain Mehdi (Global)
Renee Chen (Asia)
Herve Lievore (Asia)
Local Fixed Income
Investment Teams (# staff)4
Asia Pacific (29)
EMEA (69)
Latin America (7)
North America (26)
Non contractual document
What is our outlook for EMD?
7Non contractual document
EMD: After 2 cautious years, we are more constructive Why?
• The UK’s vote to
leave the EU is a
near-term negative
for risk assets,
including EM
• We will likely
continue to see
volatility in the
near-term
• Deceleration in
China is a setback
for EMs…yet, we
believe China
should be able to
“muddle through”
in the next few
years
• We believe that the
normalization of US
monetary policy
should have a
manageable effect
on EM countries
• After a deceleration
in global trade over
the past few years,
there has been
stabilization and a
small uptick
Source: HSBC Global Asset Management. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without notice.
8
EMD: Capital flows have picked up
Source: HSBC Global Asset Management. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without notice.
Stabilization in EM fundamentals, a more benign external environment, and attractive relative
valuations, have led to a pick-up in foreign direct investment and portfolio inflows into EMD
If US monetary policy continues to be well communicated and, in the absence of a sudden
shock, the asset class should remain supported
We believe Foreign Direct Investment (FDI) by is far more stable and supports the medium- to
long-term prospects of EM economies
EM Direct Investment EM Portfolio Flows
Non contractual document
9
EMD: Attractive relative valuations
EM Hard Currency spreads and
Local Rates levels are not cheap
on an absolute basis or on a
historical basis
However, in a world of negative
or near zero interest rates in
DMs, EMD valuations look
attractive on a relative basis
Fluctuations in EM rates will
likely be higher than in DMs,
nevertheless, we believe that
long-term investors are well
compensated for this volatility
Source: Bloomberg, HSBC Global Asset Management. as of September 9, 2016 . Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without
notice.
EM Local Yield
G3 Blended Rate
Difference
EM vs DM historical yields
Non contractual document
10
EMD: Attractive relative valuations
Investment Grade (IG) EM sovereigns are trading at a historical credit premium vs. US and
Euro equivalents
EM high yield (HY) still offers a relative premium to US and Euro HY; yet the differential has
declined over the past year as US HY spreads have widened
In our EMD portfolios, we focus on higher quality countries with large reserves, floating
exchange rates and responsible fiscal and monetary policies
In HY countries, we add exposure if valuations justify the investment case
Source: HSBC Global Asset Management, JP Morgan, Merrill Lynch, as of August 2016. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change
without notice.
EM IG is
trading at a
historical
credit
premium
EM HY still at
a premium yet
significant
decline
Investment Grade (IG) Credit High Yield (HY) Credit
Non contractual document
11
EMD: Valuations are fair to richFX and Hard Currency IG are most attractive
REER valuations still below 5-year average howeverLocal yields look rich relative to history
IG spreads look more attractive
90
95
100
105
110
115
01/1
1
04/1
1
07/1
1
10/1
1
01/1
2
04/1
2
07/1
2
10/1
2
01/1
3
04/1
3
07/1
3
10/1
3
01/1
4
04/1
4
07/1
4
10/1
4
01/1
5
04/1
5
07/1
5
10/1
5
01/1
6
04/1
6
07/1
6
RE
ER
index
EM Real Effective Exchange Rate 5-year average REER
▬ JPM GBI-EM GD
▬ 3 Year rolling average
▬ 2 standard deviations (+)
▬ 2 standard deviations (-)
▬ JPM EMBIG HY
▬ 3 Year rolling average
▬ 2 standard deviations (+)
▬ 2 standard deviations (-)
▬ JPM EMBIG IG
▬ 3 Year rolling average
▬ 2 standard deviations (+)
▬ 2 standard deviations (-)P
erc
en
t (%
)S
pre
ad
s (
Bp
s)
Sp
rea
ds (
Bp
s)
Source: HSBC Global Asset Management, JP Morgan, Bloomberg, as of August 2016. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without
notice.
Non contractual document
HY spreads are tight relative to history
12
0,0
0,5
1,0
1,5
2,0
2,5
janv. 07 nov. 07 sept. 08 juil. 09 mai 10 mars 11 janv. 12 nov. 12 sept. 13 juil. 14 mai 15 mars 16
30-w
eek
Vo
lati
lity
Rat
io
EM vs US HY Volatility Ratio EM vs US IG
0,0
0,4
0,8
1,2
1,6
2,0
2,4
2,8
août 11 févr. 12 août 12 févr. 13 août 13 févr. 14 août 14 févr. 15 août 15 févr. 16
30-w
eek
Tra
ilin
g S
t D
ev
LatAm HY EMEA HY Asia HY
0,0
0,4
0,8
1,2
1,6
2,0
août 11 févr. 12 août 12 févr. 13 août 13 févr. 14 août 14 févr. 15 août 15 févr. 16
30-w
eek
Tra
ilin
g S
t D
ev
LatAm IG EMEA IG Asia IG
EMD: Volatility is near all-time lows
Latam
Volatility
still priced
into spreads
Volatility at
low levels
against US
(particularly
for EM HY)
Source: HSBC Global Asset Management, JP Morgan, Bloomberg, as of August 2016. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without
notice.
Non contractual document
13
Signs of “overshoot” in market valuations & “green shoots” in fundamentals
1 Equally weighted across 8 commodity exporting countries (Brazil, Chile, Colombia, Peru, Russia, South Africa, Indonesia, and Mexico)
For illustrative purposes only. Past performance is no guarantee of future results.
Source: Bloomberg, data as of July 31, 2016Source: Bloomberg, data as of August 31, 2016
Current Account/GDP1Terms of Trade & Real Effective Exchange Rates1
Terms of trade for EM commodity exporters have fallen since 2011 to current levels
(comparable to early 2000’s) and real effective exchange rates have fallen even more
Commodity exporters have started to show signs of adjustment in current account
Source: HSBC Global Asset Management. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without notice.
Non contractual document
14
EM country fundamentals stabilizing
Source: EIU, August 2016, EM Countries: Brazil, Chile, China, Colombia, Hungary, Indonesia, Kazakhstan, Malaysia, Mexico, Peru, Philippines, Russia, South Africa, Turkey
Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without notice.
Stabilizing fiscal dynamics Improving current accounts
EM Debt levels have creeped up, but projected to stabilize
Inflation stabilizing and projected to decline on FX strength and base effect
EM fiscal deficit EM current accounts
EM public debt EM inflation
Non contractual document
15
Above and beyond -- The “Grand Normalization”
Source: Bloomberg, HSBC Global Asset Management, January 2016
LHS: Current Account in 1000 USD LHS: Current Account in 1000 USD
The “Super Cycle” inflated by the US and Eurozone running huge current account deficits is
officially over
Global trade and Commodity prices are “back to normal”
Without external demand support, EM asset performance will be more heterogeneous
US+Eurozone current account and Baltic Dry Index
US+Eurozone current account and Commodity Index
Past performance is no guarantee of future results. The views expressed were held at the time of
preparation and are subject to change without notice. Non contractual document
16
Country
Private
consumption
(% of GDP)
Government
consumption
(% of GDP)
Gross fixed
investment
(% of GDP)
Gross fixed
investment/
Gross
National
Savings
Budget
balance
(% of GDP)
Public debt
(% of GDP) Export/GDP
Nigeria 78.7 8.5 15.4 1.19 -2.5 14.5 0.09
Philippines 73.2 10.8 21.6 0.87 -1.9 44.5 0.18
Turkey 70 15.6 19.2 1.05 -1.7 32.6 0.19
Mexico 69.7 12.3 22.6 1.13 -3 49.7 0.36
Romania 68 6.8 25.1 1.03 -3 39.4 0.34
Paraguay 67.2 12.7 15.5 1.22 -1.7 22.9 0.27
Vietnam 65.7 6.2 25 0.86 -3.7 52 0.84
Chile 65.2 13.9 22 1.18 -3 18.7 0.25
Colombia 63.7 18.8 26.5 1.27 -2.6 47.5 0.13
Peru 63.1 13.4 24.2 1.15 -2 25.5 0.19
Brazil 63 20.8 15.5 1.18 -8.4 76 0.12
Bulgaria 60.9 16 21 0.94 -2 29 0.56
South Africa 60.7 20.7 22 1.25 -3.5 46.8 0.32
India 60.2 10.9 30.2 0.97 -3.8 51.6 0.12
Morocco 59.4 18.9 28.9 0.99 -4.2 73.4 0.21
Croatia 59.1 19.4 19.2 0.91 -4.4 91.7 0.27
Poland 58.2 18.2 20 1.01 -2.9 47.7 0.44
Indonesia 56.4 9.6 33.3 1.04 -1.8 28.6 0.16
Malaysia 54.7 12.9 25.8 0.90 -3.4 54 0.67
Russia 53.4 21 19.8 0.99 -3.8 13.9 0.28
Kazakhstan 52.2 13.3 23.7 1.04 -2.6 16.3 0.30
Taiwan 51.8 13.8 20.1 0.59 -0.9 31.4 0.48
Thailand 51 17.2 23.4 0.84 -2.5 49.7 0.52
Hungary 50.2 19.2 20.9 0.86 -2.3 75.1 0.86
South Korea 48.7 15.3 29.3 0.80 -0.6 35.2 0.36
Czech Republic 47.9 19 25.4 0.97 -1.3 40.9 0.86
China 39.7 14.3 40.6 0.91 -3.5 23.4 0.21
Singapore 37 10.4 24.8 0.50 0.5 105.8 1.11
How do EM countries grow with lower external demand?
Source: HSBC Global Asset Management, as of 18 January 2016
Non contractual document
17
How much value remains in commodity spreads?
Sector (IG) Current 4YR Avg. 4YR Tight 4YR Wide Retrace (%)
Materials 81 109 81 152 0%
Real Estate 42 60 43 77 0%
Energy 133 147 113 201 23%
Utilities 45 46 36 59 38%
Telecommunications 83 82 63 105 48%
Food 46 68 40 134 6%
Transportation 36 39 29 79 15%
Capital Goods 49 46 35 61 55%
Spread/turn of Leverage
Sector (HY) Current 4YR Avg. 4YR Tight 4YR Wide Retrace (%)
Real Estate 48 102 48 147 0%
Materials 139 175 138 249 1%
Energy 190 195 125 343 30%
Food 141 151 109 235 26%
Transportation 280 236 136 431 49%
Utilities 106 116 91 157 23%
Retail 520 279 174 528 98%
Telecommunications 193 189 76 552 25%
Spread/turn of Leverage
-70
-60
-50
-40
-30
-20
-10
0
10
20
30
8yr Avg Cembi Div Ex Commodities - Cembi Div
January 2016 – spread
widening on commodity
related issuers had the
greatest impact since the
Global Financial Crisis
(GFC). This impact has now
started to normalize…
Source: HSBC Global Asset Management. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without notice.
Non contractual document
18
Emerging market Sovereign/Quasi valuationsInvestment Grade (IG) Spreads look tight
Source: HSBC Global Asset Management, JP Morgan as of August 31, 2016
Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without notice.
Non contractual document
19
Emerging market Sovereign/Quasi valuationsHigh Yield (HY) Spreads look tight
Source: HSBC Global Asset Management, JP Morgan as of August 31, 2016
Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without notice.
Non contractual document
20
Emerging market Sovereign/Quasi valuationDispersion in spread changes creates relative value opportunities
Source: HSBC Global Asset Management, JP Morgan , as of September 8, 2016.
*Tight Eastern Europe includes Hungary, Poland, Lithuania, Romania, Latvia and Slovakia and Latam includes Mexico, Peru, Chile, Panama, Uruguay and Paraguay,
Tight spread Asia includes Philippines, India, China and Malaysia and
Grouping RatingCurrent Spd
(bps)
Duration
(yrs)
Embi Div
Wt (%)
Tight Spread Asia A- 196 7.0 12.0
Tighten Eastern Europe A- 181 5.0 10.47
Low Beta Latam BBB+ 331 9.0 17.3
Mid Beta Spread BBB- 425 7.0 18.1
CEEMEA Spread BB 406 5.0 16.09
Caribbean Spreads B+ 599 7.2 5.7
Frontier Spreads B 788 5.0 9.5
B/C B/C 1423 5.0 7.8
*
*
*
100
120
140
160
180
200
220
240
260
280
26-janv.-11 26-janv.-12 26-janv.-13 26-janv.-14 26-janv.-15 26-janv.-16
Tight Asia Spread 3yr Avg
100
150
200
250
300
350
400
450
500
26-janv.-11 26-janv.-12 26-janv.-13 26-janv.-14 26-janv.-15 26-janv.-16
Tight Eastern Europe 3yr Avg
115
165
215
265
315
365
Latam 3yr Avg
Past performance is no guarantee of future results. The views expressed were held at the time of
preparation and are subject to change without notice. Non contractual document
21
Emerging market Sovereign/Quasi valuationDispersion in spread changes creates relative value opportunities
Source: HSBC Global Asset Management, JP Morgan , as of September 8 2016.
Mid Beta Spd includes Turkey, Indonesia, Brazil, Colombia and South Africa, CEEMEA includes Russia, Lebanon, Croatia, Serbia, Azerbaijan, Kazakhstan, Georgia, Armenia and Belarus, Frontier includes Cameroon, Mozambique,
Tanzania, Jordan, Belize, Ethiopia, Tunisia, Iraq, Gabon, Trinidad and Tobago, Guatemala, Nigeria, Bolivia, Honduras, Senegal, Egypt, Kenya, Mongolia, Angola, Zambia, Ghana, Vietnam, Cote D‘Ivoire and Pakistan and B/C includes
Ukraine, Argentina, Venezuela and Ecuador.
* *
**
125
175
225
275
325
375
425
Mid Beta Spread 3yr Avg
225
275
325
375
425
475
CEEMEA 3yr Avg
300
400
500
600
700
800
26-janv.-11 26-janv.-12 26-janv.-13 26-janv.-14 26-janv.-15 26-janv.-16
Frontier 3yr Avg
650
850
1050
1250
1450
1650
1850
2050
B/C 3yr Avg
Past performance is no guarantee of future results. The views expressed were held at the time of preparation
and are subject to change without notice.
Non contractual document
22
Trends in Net Issuance
-40 000
-20 000
0
20 000
40 000
60 000
80 000
100 000
ASIA Corp EMEA Corp LATAM Corp
-30 000
-20 000
-10 000
0
10 000
20 000
30 000
40 000
ASIA Sov EMEA Sov LATAM Sov
Corporate net supply is still recovering while sovereign supply continues to be strong
0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21EMEA Sov EMEA Corp Latam Sov Latam Corp Asia Sov Asia Corp
Corporate net supply is
still recovering while
sovereign supply
continues to be strong
Source: HSBC Global Asset Management. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without notice.
Non contractual document
23
Selective opportunities exist in EM local rates
Source: Bloomberg, HSBC Global Asset Management. as of August 31, 2016 . Past performance is no guarantee of future results. USD/ELMI theoretical is composed of HSBC Global Asset Management calculations based on
inflation-adjusted productivity differentials between EM and US productivity indices.
GBI-EM Global Diversified Yield (%)
Divergence in valuations, has provided opportunities in EM local curves
We are defensively positioned to countries correlated to the US and DMs given the pressure
from the rising rate environment
We are cautious on local rate curves in Asia due to expensive valuations
LATAMCentral
Bank Rates
Rates change
priced in 1y InflationGDP
GrowthReal Rate
2y-10y slope
Brazil 14.25 -247 8.84 -5.42 541 -53
Mexico 4.25 9 2.53 2.6 172 110
Colombia 7.5 -52 8.6 2.5 -110 60
Peru 4.25 19 3.34 4.4 91 115
EUROPE
Poland 1.5 16 -0.8 3 230 110
Hungary 0.9 -26 -0.2 0.9 110 173
Russia 10.5 -176 7.5 -1.2 300 -66
Romania 1.75 -39 -0.7 4.3 245 216
Turkey 8.18 87 7.64 4.81 54 50
South Africa 7 103 6.3 -0.2 70 87
ASIA
Thailand 1.5 9 0.38 3.2 112 46
Malaysia 3 -50 1.6 4.2 140 102
Philippines 3 32 1.9 6.9 110 81
Indonesia 6.5 0 3.45 4.92 305 55
US 0.5 35 1.0 2.1 -50 82
Source: Bloomberg, HSBC Global Asset Management. as of July 21, 2016
Non contractual document
24
Select currency valuations have improved
Source: Bloomberg, HSBC Global Asset Management. as of August 26, 2016. Past performance is no guarantee of future results. USD/ELMI theoretical is composed of HSBC Global Asset Management calculations based on
inflation-adjusted productivity differentials between EM and US productivity indices.
Emerging Market FX Valuation
Currency valuations have improved after significant depreciation, however deteriorating
fundamentals and challenging external environment points to further weakness in currencies
Non contractual document
25
Local currency technical analysis
Source: HSBC Global Asset Management, Bloomberg. Data as of August 2016. The data presented is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial
instrument or investment strategy. Past performance is no guarantee of future results. USD positions expressed as the sum of the number of contracts of MXN, CAD, AUD, EUR, and GBP that speculative accounts were
long/short vs USD at the Chicago Mercantile Exchange (CME).
Speculative Currency Positioning
Mexican Peso Positioning
Non contractual document
26
High yielders vs Asian currencies
Source: Bloomberg, HSBC Global Asset Management Currency spot return since 2011 versus implied yields as of September 2016. Past performance is no guarantee of future results.
Currency spot returns since 2011 versus implied yields
Select EM HY currencies offer value given attractive yields and valuations
Asian currencies: further room to adjust and offer low, or in some cases, negative yields
Non contractual document
27
“Fallen” angels offer valueColombia – Attractive carry and valuations
Terms of Trade Current Account
1Y Government YieldREER
Non contractual document
Source: Bloomberg, HSBC Global Asset Management. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without notice.
28
“Fallen” angels offer valueRussia – Improving terms of trade
Terms of Trade Current Account
1Y Government YieldREER
Non contractual document
Source: Bloomberg, HSBC Global Asset Management. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without notice.
29
China : lower growth or lower debt?
Debt
The debt problem is still growing
with no significant reforms done to
tackle the cause
– What is the real size of the debt problem?
– What are the sources of the problem?
– Where will stress be coming from?
Growth
“Two-speed economy” +
“Two-speed housing market” +
“Two-speed investment”
– H1 growth was supported by infrastructure
building, money pumped by fiscal policy
– Private investment has dropped to record
low at 2%, business sentiment at the low
– July China loan figure revealed a staggering
fact: 100% of newly increased loans are
mortgages
Source: HSBC Global Asset Management. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without notice.
Non contractual document
30
Outlook summary and strategy
Dispersion in
emerging
markets will
continue
creating both
reasons to be
cautious, but
opportunities
do exist
Medium and
long term
return
projections for
the asset class
are decent, and
should
compensate
short-term
volatility along
the way
Factors such
as China,
commodities
and the FED
may have
already been
priced into
some
segments of
the EM market
Seek to be
compensated
for interest,
credit, liquidity
and volatility
risk
Keep a buffer
of cash in the
portfolios to
manage flows
and to allocate
to new
opportunities
as they arise
Source: HSBC Global Asset Management. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without notice.
Non contractual document
EMD: HSBC’s product offering
32
HSBC Global Asset ManagementHistorical picture of assets under management (AUM)
1. Prior to 2010, assets managed in Hong Kong and Singapore were not classified as Emerging markets.
Source: HSBC Global Asset Management. Data as of 30 June 2016. Differences due to rounding. The data is supplemental to the GIPS compliant report at the end of this material
Emerging Markets Assets Growth1
We are of the world’s largest EMD managers with more than USD406.1 billion in AUM
– Total EM assets have grown from USD46 billion (2005) to USD 114.5 billion (June 2016)
– EM Fixed Income assets total USD82.4 billion, 71% of total EM assets
– EMD assets managed by team in New York total USD18.4 billion
64
12.1
18.4
20
0
25
50
75
100
125
150
175
2007 2008 2009 2010 2011 2012 2013 2014 2015 2Q16
US
D b
illio
ns
EM Fixed Income (ex-NY EMD) EM Equity EM Other NY EMD Team
Non contractual document
33
EMD: Cross border fund rangeHSBC Global Investment Funds, a Luxembourg domiciled SICAV
Source: HSBC Global Asset Management as at 31 August 2016. *Benchmarked strategies are those that have a comparative index.
For illustrative purposes only.
Benchmarked*
Strategies
Flexible Strategy
Duration
< 3 yrs
Duration
> 3 yrs
Hard currency Local currency
HSBC GIF Global Emerging
Markets Local Debt
HSBC GIF Global Emerging
Markets Local Currency Rates
HSBC GIF Global Emerging
Markets Bond
HSBC GIF GEM Inflation
Linked Bond
HSBC GIF Global Emerging
Markets Corporate Debt
HSBC GIF Global Emerging Markets Investment Grade Bond
HSBC GIF GEM Debt Total Return
Non contractual document
EMD Total Return Strategy
35
Total Return Strategy: OverviewThe outputs that will likely challenge current business models
• Deliver the average
performance of the EM
external and local debt
indices
• Lower volatility
• Duration: 1-4 years
• Flexibility to invest across the
full emerging market debt
opportunity set with no bias to
a benchmark
• Key focus is to minimize the
potential downside risk
• Portfolio engineering and risk
management are rigorously
integrated in the investment
process
• 5Y annualized investment
return: 4.17%
• 5Y Sharpe ratio: 0.63
• Launch: November 1999
• AUM: USD5.1 billion as of
June 2016
ObjectiveTotal return
approachPerformance
Non contractual document
Source: HSBC Global Asset Management, JP Morgan. Data as of 30 June 2016 unless noted otherwise. Performance data is calculated gross of fees and assumes the reinvestment of dividends, income and any capital gains and is net of
transaction costs. The results are shown before the deduction of investment advisory fees and other expenses, which would reduce a return. Information about investment advisory fees is available in our Form ADV Part 2A, which is available
upon request. Returns greater than one year are annualized returns. Past performance is no guarantee of future results. Data is supplemental to the GIPS® compliant presentation at the end of this material. Please see important disclosure at the
end of this presentation concerning the impact of investment advisory fees and expenses on performance, benchmark definitions and calculation methodology for characteristics. Returns and Sharpe ratio are based on the composite information.
Portfolio characteristics, including position sizes and sector allocations, among others, are generally averages, are only for illustrative purposes, and do not reflect the investments of an actual portfolio unless otherwise noted. The investment
guidelines of an actual portfolio may permit or restrict investments that are materially different in size, nature and risk from those shown. Information reflects the representative account of the composite. Each portfolio may differ due to individual
client restrictions and guidelines. Accordingly individual results will vary. Strategy goals are over a 12 month period.
36
EMD Total Return Strategy: Historical sector exposureSupplemental information as of 31 August 2016
Source: HSBC Global Asset Management. Data as of 31 August 2016. Weightings and holdings are subject to change without notice. Please see important disclosure at the end of this presentation concerning calculation
methodology for characteristics. Portfolio characteristics, including position sizes and sector allocations, among others, are generally averages, are only for illustrative purposes, and do not reflect the investments of an actual
portfolio unless otherwise noted. The investment guidelines of an actual portfolio may permit or restrict investments that are materially different in size, nature and risk from those shown. Data is supplemental to the GIPS®
compliant presentation at the end of this material. Each portfolio may differ due to individual client restrictions and guidelines. Accordingly individual results will vary. Past performance is no guarantee of future results.
Emerging Markets Debt – Total Return Strategy Net Historical Exposures
Our holistic approach to portfolio construction does not create biases to any particular
emerging market asset class and actively allocates amongst potentially optimal opportunities
75%
64%
63%
51%
74% 8
0% 84%
48%
32% 3
7%
30%
30%
22%
20% 23%
31%
52%
93%
94%
102%
99%
75%
88% 91%
82%
91%
64%
21% 2
6%
26%
20% 23%
23%
22%
24%
35%
43% 47% 49% 54%
38%
37% 40%
67%
79%
80%
72%
68%
68%
65%
52%
52%
60% 6
6%
60%
60%
(2,0)
0,0
2,0
4,0
6,0
8,0
10,0
12,0
(20%)
(0%)
20%
40%
60%
80%
100%
120%
janv.-12 avr.-12 juil.-12 oct.-12 janv.-13 avr.-13 juil.-13 oct.-13 janv.-14 avr.-14 juil.-14 oct.-14 janv.-15 avr.-15 juil.-15 oct.-15 janv.-16 avr.-16 juil.-16
Dura
tion (y
ears
)
Sovereign Quasi Corporate Local Rates Local Fx Equity Net Exposure Duration (rhs)
Non contractual document
37
EMD Total Return StrategySupplemental information as at 31 August 2016
Source: HSBC Global Asset Management as 31 August 2016 . Portfolio characteristics, including position sizes and sector allocations, among others, are generally averages, are only for illustrative purposes, and do not reflect
the investments of an actual portfolio unless otherwise noted. The investment guidelines of an actual portfolio may permit or restrict investments that are materially different in size, nature and risk from those shown. Information
reflects the representative account of the Emerging Markets Debt – Total Return composite. This is for information only and does not constitute investment advice, a solicitation or a recommendation to buy, sell or subscribe to
any investment. It is not intended to provide and should not be relied upon for accounting, legal or tax advice. Representative overview of the investment process, which may differ by product, client mandate or market
conditions. Each portfolio may differ due to individual client restrictions and guidelines. Past performance is no guarantee of future results. Data is supplemental to the GIPS® compliant presentation at the end of this material.
Non contractual document
External
Country
Duration Weighted
Exposure
Spread
Duration
% Market
Value
Barbados 0.00 0.00 0.10
Brazil 0.35 0.12 2.75
Chile 0.02 0.02 0.77
China 0.05 0.08 4.08
Colombia 0.24 0.27 7.68
Croatia 0.01 0.01 1.39
Dominican Republic 0.01 0.01 0.15
Europe 0.00
Hungary 0.01 0.01 0.45
India 0.00
Indonesia 0.11 0.11 2.94
Israel 0.00 0.00 0.45
Kazakhstan 0.00 0.00 0.01
Korea, Republic Of 0.00 -0.09 -4.41
Malaysia 0.01 0.01 0.18
Mexico 0.42 0.39 4.70
Panama 0.04 0.04 0.96
Peru 0.00 0.02 1.34
Philippines 0.00 0.00 0.05
Poland 0.00
Qatar 0.00 -0.01 -1.30
Russian Federation 0.01 0.02 1.33
Serbia 0.03 0.03 1.98
South Africa 0.11 0.19 6.02
Turkey 0.06 0.09 6.28
United Arab Emirates 0.00 -0.01 -0.38
United States -0.06 0.00 6.55
Venezuela 0.00 0.00 0.06
TOTAL 1.40 1.33 44.13
Local
Currency
Duration Weighted
Exposure
% Currency
Exposure
% Market
Value
BRL 0.01 0.04 5.89
CLP 0.00 -2.80
CNY 0.00 0.00
COP 0.00 7.37
EUR 0.00 -4.91
HUF 0.00 -0.03
INR 0.00 3.70
IDR 0.00 3.84
ILS 0.00 -0.03
KRW 0.00 -2.58
MYR 0.00 0.03
MXN 0.19 5.98 6.86
PLN 0.00 -2.89
RUB 0.00 7.81
ZAR 0.09 -0.04 1.56
TRY 0.07 0.03 1.24
AED 0.00 0.00
USD 0.00 84.47
TOTAL 0.36 100.00 15.55
38
Emerging Markets Debt – Total ReturnSupplemental information as of 30 June 2016
Source: eVestment, HSBC Global Asset Management. Past performance is no guarantee of future results. Performance of the composite results and data represent absolute value of the composite. Performance data is calculated gross of fees
and assumes the reinvestment of dividends, income and any capital gains and is net of transaction costs. The results are shown before the deduction of investment advisory fees and other expenses, which would reduce a return. Information
about investment advisory fees is available in our Form ADV Part 2A, which is available upon request. Returns greater than one year are annualized. Data is supplemental to the GIPS® compliant presentation at the end of this material. Please
see important disclosure at the end of this presentation concerning the impact of investment advisory fees and expenses on performance and benchmark definitions. Portfolio characteristics, including position sizes and sector allocations, among
others, are generally averages, are only for illustrative purposes, and do not reflect the investments of an actual portfolio unless otherwise noted. The investment guidelines of an actual portfolio may permit or restrict investments that are materially
different in size, nature and risk from those shown. Each portfolio may differ due to individual client restrictions and guidelines. Accordingly individual results will vary.
5 Years As Of: 30 June 2016
HSBC Global Asset Management:
Emerging Markets Debt – Total Return
Non contractual document
39
Emerging Markets Debt – Total Return attributionSupplemental information as of 31 August 2016
Attribution (bps) 2010 2011 2012 2013 2014 2015 YTD 2016
Sovereign/Quasi-Sovereign
Investment Grade 118 149 354 (58) 255 (29) 232
BB-Rated 134 20 158 (2) 12 19 194
B-Rated 174 97 127 5 14 0 1
< B-Rated 0 0 0 0 44 0 0
Local Exposure 267 (52) 235 33 328 (32) 278
Corporate Exposure 219 (44) 357 (7) 36 (7) 33
Special Situations and Equities 9 (92) 47 0 0 0 0
IRS Hedge 50 (89) (75) 76 (9) (9) (66)
Others 78 (8) 6 (115) 69 (7) 5
Total 10.49% (0.19%) 12.09% (0.68%) 7.49% (0.65%) 6.77%
Source: HSBC Global Asset Management. Data as of 31 December 2010, 30 December 2011, 31 December 2012, 31 December 2013, 31 December 2014, 31 December 2015 and 31 July 2016. Performance data is calculated gross of fees and
assumes the reinvestment of dividends, income and any capital gains and is net of transaction costs. The results are shown before the deduction of investment advisory fees and other expenses, which would reduce a return. Information about
investment advisory fees is available in our Form ADV Part 2A, which is available upon request. Returns greater than one year are annualized returns. Past performance is no guarantee of future results. Attribution is based on the absolute
performance of the composite. Data is supplemental to the GIPS® compliant presentation at the end of this material. Please see important disclosure at the end of this presentation concerning the impact of investment advisory fees and expenses
on performance. Portfolio characteristics, including position sizes and sector allocations, among others, are generally averages, are only for illustrative purposes, and do not reflect the investments of an actual portfolio unless otherwise noted. The
investment guidelines of an actual portfolio may permit or restrict investments that are materially different in size, nature and risk from those shown. Each portfolio may differ due to individual client restrictions and guidelines. Accordingly individual
results will vary. The blended benchmark consists of a 50/25/25 blend of the JPM EMBI Global index, JPM GBI-EM Global Div index and JPM ELMI+.
Index Performance 2010 2011 2012 2013 2014 2015 YTD 2016
JPM EMBIG 12.04% 8.46% 18.54% (6.58%) 5.53% 1.23% 14.65%
JPM GBI-EM GD 15.68% (1.75%) 16.76% (8.98%) (5.72%) (14.92%) 9.68%
JPM ELMI+ 5.68% (5.19%) 7.45% (2.04%) (7.03%) (7.61%) 6.44%
Blended 11.37% 2.40% 15.31% (6.03%) (0.55%) (5.20%) 11.36%
Non contractual document
40
Risk adjusted return characteristicsSupplemental information as of 30 June 2016
1. Blended market is 50% JPM EMBIG (external debt)/25% JPM GBI-EM GD (local debt)/25% JPM ELMI+ (local currency).
Source: HSBC Global Asset Management, JP Morgan and Morningstar. Data as of 30 June 2016. Inception Date: 31 October 1999. Benchmark data is for illustrative purposes only and does not represent any actual benchmark for the EMD Total
Return strategy. Performance data is calculated gross of fees and assumes the reinvestment of dividends, income and any capital gains and is net of transaction costs. The results are shown before the deduction of investment advisory fees and
other expenses, which would reduce a return. Information about investment advisory fees is available in our Form ADV Part 2A, which is available upon request. Returns greater than one year are annualized returns. Past performance is no
guarantee of future results. Annualized Returns, Standard Deviation, Correlation and Maximum Drawdown are based on composite data. Duration is based on the representative account of the composite. Time period for drawdown is 10 years
and 3 years as of June 30, 2016. Correlations from the period July 2006 – June 2016. Data is supplemental to the GIPS® compliant presentation at the end of this material. Please see important disclosure at the end of this presentation
concerning the impact of investment advisory fees and expenses on performance, benchmark definitions and calculation methodology for characteristics. Each portfolio may differ due to individual client restrictions and guidelines. Accordingly
individual results will vary.
JPM EMBIG
(External debt)
JPM GBI-EM GD
(Local bond)
JPM ELMI+
(Local currency)
Blended
Benchmark1
HSBC EMD
Total Return
Annualized Return 10 years / 3 years 7.91 / 6.44 5.72 / (3.57) 2.74/ (3.04) 6.13 / 1.52 7.16 / 4.50
Standard Deviation 10 years / 3 years 8.85 / 6.37 13.18 / 12.14 8.52 / 7.08 9.25 / 7.64 6.03 / 4.20
Duration (Years) Current / Typical range 6.94 4.93 0.30 4.7 1.90 / 1.0 – 4.0
Maximum Drawdown 10 years / 3 years (20.74) / (4.32) (29.32) / (24.32) (20.78) / (17.01) (19.21) / (12.23) (7.89) / (3.69)
Period Maximum Drawdown 10 years
Period Maximum Drawdown 3 years
06/01/08-10/31/08
09/01/14-09/30/15
05/01/13-12/31/15
07/01/14-12/31/15
05/01/11-01/31/16
07/01/14-01/31/16
08/01/08-10/31/08
09/01/14-09/30/15
08/01/11-09/30/11
08/01/15-01/31/16
JPM EMBIG
(External debt)
JPM GBI-EM GD
(Local bond)
JPM ELMI+
(Local currency)
Blended
Benchmark1
HSBC EMD
Total Return
JPM EMBIG (External debt) 1.00 0.83 0.72 0.94 0.68
JPM GBI-EM GD (Local bond) - 1.00 0.93 0.97 0.71
JPM ELMI+ (Local currency) - - 1.00 0.91 0.67
Blended Benchmark1 - - - 1.00 0.74
HSBC EMD Total Return - - - - 1.00
Non contractual document
41
Emerging Markets Debt – Total ReturnSupplemental information as of 30 June 2016
Source: HSBC Global Asset Management Data as of 30 June 2016. Performance data is calculated gross of fees and assumes the reinvestment of dividends, income and any capital gains and is net of
transaction costs. The results are shown before the deduction of investment advisory fees and other expenses, which would reduce a return. Information about investment advisory fees is available
in our Form ADV Part 2A, which is available upon request. Past performance is no guarantee of future results. Data is supplemental to the GIPS® compliant presentation at the end of this material. Please see
important disclosure at the end of this presentation concerning the impact of investment advisory fees and expenses on performance, benchmark definitions and calculation methodology for characteristics. Data is for illustrative
purposes and reflects the representative account of the composite. Each portfolio may differ due to individual client restrictions and guidelines. Accordingly individual results will vary.
(1,0)
(0,5)
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
(10,0)
(5,0)
0,0
5,0
10,0
15,0
20,0
juin
-11
aoû
t-1
1
oct.
-11
déc.-
11
févr.
-12
avr.
-12
juin
-12
aoû
t-1
2
oct.
-12
déc.-
12
févr.
-13
avr.
-13
juin
-13
aoû
t-1
3
oct.
-13
déc.-
13
févr.
-14
avr.
-14
juin
-14
aoû
t-1
4
oct.
-14
déc.-
14
févr.
-15
avr.
-15
juin
-15
aoû
t-1
5
oct.
-15
déc.-
15
févr.
-16
avr.
-16
juin
-16
Rolli
ng 1
2-m
onth
Sharp
e R
atio
Rolll
ing
12-m
onth
perf
orm
ance (
%)
Rolling 12-month Performance Rolling 12-month Sharpe Ratio
Non contractual document
Appendix
43
New reality of Asia: strong trade balance ≠ strong trade
Source: Bloomberg, HSBC Global Asset Management. as of 30 April 2015. Asian countries and regions in the charts are: Indonesia, Malaysia, Thailand, Taiwan, Philippines, Singapore, China. Past
performance is no guarantee of future results.
Asia ex China trade (yoy%)
Asia ex China trade (mmUSD)
Strong recovery of trade balances hides the
truth of weak exports for Asian exporting
nations
Year-on-year exports and imports have
dropped from double digits to negative
Asia trade (mmUSD)
Non contractual document
44
“Invincible” RMB: the ultimate tail risk of Asian currencies
Source: Bloomberg, EIU, HSBC Global Asset Management as of December 2015.
Fixed Exchange RateFree Capital Flow
Independent Monetary Policy
Source: Bloomberg, as of August 31, 2016.
Nominal GDP (USD bn)
3 730
21 440
10 955
12 015
17 947
0
5 000
10 000
15 000
20 000
25 000
Ch
ina
Inte
rnat
ion
al R
eser
ves
Ch
ina
M2
Sto
ck
Ch
ina
No
min
al G
DP
US
M2
Sto
ck
US
No
min
al G
DP
3 330
838
1 253
0
500
1 000
1 500
2 000
2 500
3 000
3 500
Chin
a Inte
rnatio
nal R
eserv
es
2015 C
apital O
utflo
w
BIS
Fo
reig
n C
laim
s o
n C
hin
a
REER
Non contractual document
45
China’s Balance of payment – large capital outflows likely to be short term, however…
Source: EIU, HSBC Global Asset Management. as of Apr 2016
2 946 070
500 732
-1 494 434
1 329 490
-2 000 000
-1 500 000
-1 000 000
-500 000
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
3 500 000
1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015
Accumulated Current Account
Accumulated Inward Portfolio investment and intl bond issues
Accumulated Other capital flows
Stock of inward foreign direct investment
-400 000,00
-300 000,00
-200 000,00
-100 000,00
0,00
100 000,00
200 000,00
300 000,00
400 000,00
500 000,00
600 000,00
700 000,00
1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015
Current transfers: balance
Income: balance
Services: balance
Trade balance
Current-account balance
-200 000,00
-100 000,00
0,00
100 000,00
200 000,00
300 000,00
400 000,00
1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015
Outward direct investment
Inward direct investment
Net direct investment flows
-1 000 000,00
-800 000,00
-600 000,00
-400 000,00
-200 000,00
0,00
200 000,00
400 000,00
600 000,00
800 000,00
1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015
Current-account balance
Other capital flows (net)
Net portfolio investment flows
Net direct investment flows
Balance of Payment
Services deficit will negatively impact the current account
Majority of reserves accumulated through current account surplus
Risks to the outlook for balance of paymentsOutward FDI has increased dramatically
Non contractual document
Important Information
47
Important Information
Gross performance information. Performance data is calculated gross of fees and assumes the reinvestment of dividends, income and any capital gains and is net of transaction costs. The results are shown
before the deduction of investment advisory fees and other expenses, which would reduce a return. Information about investment advisory fees is available in our Form ADV Part 2A, which is available upon
request. The following hypothetical illustrates how investment advisory fees, compounded over time, could impact performance. Assuming a portfolio’s annual rate of return is 15% for 5 years and the annual
investment advisory fee is 50 basis points, the gross cumulative five-year return would be 101.1% and the five-year return net of fees would be 96.8%.
Characteristics methodology.
Characteristics are based on the representative account of the composite.
Cash equivalents are defined as any security with a maturity of less than 1 year.
For all strategies except EMD – Total Return, data representing regional, sector and quality distribution characteristics of the strategy have been calculated after removing cash and cash equivalents and
rebalancing the remaining investments to 100%.
Average Quality ratings are based on HSBC methodology and may differ from published sources. The average quality is calculated utilizing a weighted average of each fund's holdings in accordance with
HSBC’s internal methodology, which includes taking the highest rating of S&P, Moody’s or Fitch where available. If a security is unrated, it will be assigned a rating in accordance with HSBC’s internal
methodology. Unrated categories reflect Cash and cash equivalents.
Country distribution data reflects the total exposure to a country which includes local currency exposure.
Duration calculations include cash and cash equivalents.
Attribution and Contribution to Returns for the components are based on the aggregate relative performance of the underlying holdings, which includes both contributors and detractors.
Risk Considerations. There is no assurance that a portfolio will achieve its investment objective. In addition, there is no guarantee that any investment strategy will work under all market conditions, and each
investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. Portfolios are subject to market risk, which is the possibility that the market values of securities
owned by the portfolio will decline. Accordingly, you can lose money investing in any of these strategies. Please be aware that these strategies may be subject to certain additional risks, which should be considered
carefully along with the strategy’s investment objectives and fees before investing. Foreign and emerging markets. Investments in foreign markets entail special risks such as currency, political, economic, and
market risks. The risks of investing in emerging-market countries are greater than the risks generally associated with foreign investments. Fixed income securities. Subject to credit and interest-rate risk. Credit
risk refers to the ability of an issuer to make timely payments of interest and principal. Interest-rate risk refers to fluctuations in the value of a fixed-income security resulting from changes in the general level of
interest rates. In a declining interest-rate environment, the portfolio may generate less income. In a rising interest-rate environment, bond prices fall. Credit Quality. Investments in high-yield securities (commonly
referred to as “junk bonds”) are often considered speculative investments and have significantly higher credit risk than investment-grade securities. The prices of high-yield securities, which may be less liquid than
higher rated securities, may be more vulnerable to adverse market, economic or political conditions. Convertibles. Subject to the risks of equity securities when the underlying stock price is high relative to the
conversion price (because more of the security’s value resides in the conversion feature) and debt instruments when the underlying stock price is low relative to the conversion price (because the conversion
feature is less valuable). A convertible bond is not as sensitive to interest rate changes as a similar non-convertible debt instrument, and generally has less potential for gain or loss than the underlying equity
security. Exchange-Traded Fund Risk. Subject to the underlying securities the ETF is designed to track, although lack of liquidity in an ETF could result in it being more volatile than the underlying portfolio of
securities. Disruptions in the markets for the securities underlying ETFs could result in losses on the Portfolio’s investments. ETFs also have management fees that increase their costs versus owning the
underlying securities directly. Derivative instruments. Derivatives can be illiquid, may disproportionately increase losses and may have a potentially large negative impact on performance. Non-diversification.
Focusing investments in a small number of issuers, industries, foreign currencies or particular countries or regions increases the risks associated with a single economic, political or regulatory occurrence.
eVestment Universe descriptions. eVestment Emerging Markets Fixed Income – Hard Currency: Common benchmarks include JPM EMBI Global Diversified, JPM EMBI Global, JPM EMBI+. The Primary
Fixed Income Style/Sector includes sovereign and quasi-sovereign debt securities traded in developed currencies and issued by emerging market governments. EMD Hard Currency (JPM EMBIG Index). This
universe is based on the eVestment Universe Emerging Markets Fixed Income – Hard Currency, which we filtered to only include those strategies benchmarked against the JPM EMBIG Index. This is provided for
illustrative purposes only and is not an official eVestment Universe.
eVestment Emerging Markets Fixed Income – Local Currency: Common benchmarks include JPM GBI – EM Broad, JPM GBI – EM Broad Diversified, JPM GBI – EM Global, JPM GBI – EM Global Diversified,
JPM GBI – EM, JPM ELMI+. The Primary Fixed Income Style/Sector includes sovereign and quasi-sovereign debt securities traded in local currency and issued by emerging market governments. eVestment
Emerging Markets Fixed Income – Corporate Debt: Common benchmarks include JPM CEMBI, JPM CEMBI Diversified, JPM CEMBI Broad and JPM CEMBI Broad Diversified . The Primary Fixed Income
Style/Sector is USD denominated debt issued by emerging market corporations with an Investment Grade or High Yield credit rating. Emerging Markets Fixed Income – Hard Currency, which we filtered to only
include those strategies benchmarked against the JPM EMBIG Index. This is provided for illustrative purposes only and is not an official eVestment Universe.
48
Index definitions
These indices are presented to provide you with an understanding of their historic long-term performance, and are not presented to illustrate the performance of any security or trading strategy. All indices are
unmanaged. Index returns do not reflect any fees, expenses or sales charges associated with investing. Investors cannot invest directly in an index.
The JP Morgan EMBI-Global (EMBIG) Index includes USD-denominated Brady bonds, Eurobonds, and traded loans issued by sovereign and quasi-sovereign entities, and is a traditional market-capitalization
weighted index. The JP Morgan GBI-EM Diversified Index provides a measure of local currency denominated, fixed rate, government debt issued in emerging markets. Weightings among the countries are more
evenly distributed within the diversified index compared to it’s three main composite indices consisting of the GBI-EM, GBI EM Global, and GBI EM Broad indices. The JP Morgan GBI-EM Global Diversified
Index is a comprehensive global local emerging markets index, and consists of liquid, fixed rate, domestic currency government bonds. The JP Morgan ELMI+ Index is an emerging markets currency (FX)
benchmark; the index contains more countries and also brings in the currency aspect of the market, which is an important component of our strategy. The JPM Corporate Emerging Markets Bond Index (JPM
CEMBI) measures the performance of corporate bonds issued in emerging markets. The CEMBI Broad is a comprehensive version of the CEMBI, and is also available in a Diversified version, in which weightings
are more evenly distributed. The JPM US Liquid Index (JULI) measures the performance of the investment grade dollar denominated corporate bond market. The JULI focuses on the most liquid instruments with
the objective of making the index a fair and true representation of the investable market Performance and statistics are available by individual issuers, for sectors and sub-sectors, and maturity buckets (dating back
to 31-Dec-1999) Liquid, USD investment grade corps; must be a bullet security paying a non-zero coupon semi-annually. Excludes convertibles, refundables, extendables and perpetuals. The JPM Government
Bond Index (JPM GBI) tracks fixed rate issuances from high-income countries spanning the globe. The JPM Global High Yield Index is designed to mirror the investable universe of the US dollar high yield
corporate debt market. The index is comprised of issuers domiciled across the global markets. The international component of the index is comprised of emerging market and developed market domiciled issuers.
The JPM GBI US Country Index is comprised of the total return of USTs with greater than 13 months to maturity. The JPM Global Aggregate Bond Index (JPM GABI) consists of the JPM GABI US, a U.S.
dollar denominated, investment-grade index spanning asset classes from developed to emerging markets, and the JPM GABI extends the U.S. index to also include multi-currency, investment-grade
instruments. The JPM GABI represents nine distinct asset classes: Developed Market Treasuries, Emerging Market Local Treasuries, Emerging Markets External Debt, Emerging Markets Credit, US Credit, Euro
Credit, US Agencies, US MBS, Pfandbriefe – represented by well-established J.P. Morgan indices. The JPM GABI US is constructed from over 3,200 instruments issued from over 50 countries, and collectively
represents USD8.6 trillion in market value. The JPM GABI is constructed from over 5,500 instruments issued from over 60 countries and denominated in over 25 currencies, collectively representing USD20 trillion
in market value.
The Merrill Lynch 3-Month LIBOR Index represents a high-quality base rate for 3-month constant maturity dollar denominated deposits. The BofA Merrill Lynch U.S. High Yield Master II Index tracks the
performance of below investment grade US dollar-denominated corporate bonds publicly issued in the US domestic markets. Source BofA Merrill Lynch, used with permission. BOFA MERRILL LYNCH IS
LICENSING THE BOFA MERRILL LYNCH INDICES "AS IS," MAKES NO WARRANTIES REGARDING SAME, DOES NOT GUARANTEE THE SUITABILITY, QUALITY, ACCURACY, TIMELINESS, AND/OR
COMPLETENESS OF THE BOFA MERRILL LYNCH INDICES OR ANY DATA INCLUDED IN, RELATED TO, OR DERIVED THEREFROM, ASSUMES NO LIABILITY IN CONNECTION WITH THEIR USE, AND
DOES NOT SPONSOR, ENDORSE, OR RECOMMEND HSBC GLOBAL ASSET MANAGEMENT, OR ANY OF ITS PRODUCTS OR SERVICES.
Morgan Stanley Capital International Emerging Markets Index (MSCI) is a leading provider of investment decision support tools to investors globally, including asset managers, banks, hedge funds and pension
funds. Their products and services include indices, portfolio risk and performance analytics, and governance tools. The MSCI Global Equity Indices are the most widely used benchmarks for cross border equity
funds. MSCI calculates over 120,000 equity and REIT indices daily, including the well-known MSCI EAFE (Europe, Australasia, and Far East), MSCI World, MSCI ACWI IMI (All Country World Investable Market
Index) and MSCI Emerging Markets Indices. In addition to benchmarking and performance measurement, MSCI indices are increasingly being integrated into other areas of our clients' investment processes such
as research and asset allocation, and are frequently used as the basis of derivative financial products. The MSCI Emerging Markets Index (MSCI EM)is a free float-adjusted market capitalization index that is
designed to measure equity market performance of emerging markets. The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market
performance of developed markets.
The EURO STOXX 50 (Price) Index is a free-float market capitalization-weighted index of 50 European blue-chip stocks from those countries participating in the EMU. Each component's weight is capped at 10%
of the index's total free float market capitalization. The index was developed with a base value of 1000 as of December 31, 1991.
The S&P 500 Index is widely regarded as a gauge of the U.S. equities market. It includes 500 leading companies in leading industries of the U.S. economy.
The Barclays US High Yield Index covers the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. The Barclays US Investment Grade Index covers the USD-denominated
domestic and specified foreign debentures and secured notes that are rated investment grade (Baa3/BBB- or higher) by at least two ratings agencies. The Barclays Emerging Markets Tradable Government
Inflation-Linked Bond (EMTIL) Index is a rules-based index that provides a diversified exposure to a tradable sub-set of local currency inflation-linked debt from Emerging Markets (EM) Sovereign issuers
represented in the broad benchmark Emerging Markets Government Inflation-Linked Bond (EMGILB) Index
49
Firm disclosure
This document is distributed by HSBC Global Asset Management (France) and is only intended for professional investors as defined by MiFID. The information contained herein is subject to change
without notice. All non-authorised reproduction or use of this commentary and analysis will be the responsibility of the user and will be likely to lead to legal proceedings. 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 commentary and analysis presented in this document reflect the opinion of HSBC Global Asset Management on the markets, according to the information available to date. They do not
constitute any kind of commitment from HSBC Global Asset Management (France). Consequently, HSBC Global Asset Management (France) will not be held responsible for any investment or
disinvestment decision taken on the basis of the commentary and/or analysis in this document. All data from HSBC Global Asset Management unless otherwise specified. Any third party information
has been obtained from sources we believe to be reliable, but which we have not independently verified.
Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Global Asset Management (France) accepts no liability for any failure to meet such
forecast, projection or target. The performance figures and simulation/backtest results displayed in the document relate to the past and past performance should not be seen as an indication of
future returns. It is important to remember that the value of investments and any income from them can go down as well as up and is not guaranteed. Capital is not guaranteed. Fluctuations in the
rate of exchange of currencies may have a significant impact on sub-fund performance. Investments in emerging markets are by nature higher risk and potentially more volatile than those inherent in
established markets. Investors are reminded that investments in High Yield issues represent a higher risk of default compared to Investment Grade issues. Investments in Credit Default Swaps
(CDS) are less liquid than standard bond issues. Fluctuations in the rate of exchange of currencies may have a significant impact on performance. Investment in Financial Derivative Instruments
(FDI) may result in losses in excess of the amount invested. This is because a small movement in the price of the underlying financial instrument may result in a substantial movement in the price of
the FDI. The strategies can invest in sub investment grade bonds, which may produce a higher level of income than investment grade bonds, but carry increased risk of default on repayment. The
value of the underlying assets are strongly affected by interest rate fluctuations and by changes in the credit ratings of the underlying issuer of the assets. The Total Return strategy does not imply
there is any protection of capital or guarantee of a positive return over time. The sub-fund is subject to market risks at any time. As interest rates rise debt securities will fall in value. The value of
debt securities is inversely proportional to interest rate movements. Issuers of debt securities may fail to meet their regular interest and/or capital repayment obligations. All credit instruments
therefore have potential for default.
HSBC GIF Global Emerging Markets Bond, HSBC GIF GEM Debt Total Return, HSBC GIF GEM Inflation Linked Bond, HSBC GIF Global Emerging Markets Local Debt, HSBC GIF Global Emerging
Markets Local Currency Rates, HSBC GIF Global Emerging Markets Debt Total Return, HSBC GIF Global Emerging Markets Inflation Linked Bond, HSBC GIF Global Emerging Markets Corporate
Debt and HSBC GIF Global Emerging Markets Investment Grade are sub-funds of HSBC Global Investment Funds, a Luxemburg domiciled SICAV. This material is solely for the attention of
institutional, professional, qualified or sophisticated investors and distributors. It is not to be distributed to the general public, private customers or retail investors in any jurisdiction whatsoever nor to
“US Persons”.
Important information for Luxembourg investors: HSBC entities in Luxembourg are regulated and authorised by the Commission de Surveillance du Secteur Financier (CSSF).
Important information for Swiss investors: This document may be distributed in Switzerland only to qualified investors according to Art. 10 para 3, 3bis and 3ter of the Federal Collective Investment
Schemes Act (CISA). The presented fund is authorised for distribution in Switzerland in the meaning of Art. 120 of the Federal Collective Investment Schemes Act. (Potential) investors are kindly
asked to consult the latest issued Key Investor Information Document (KIID), prospectus, articles of incorporation and the (semi-)annual report of the fund which may be obtained free of charge at
the head office of the representative: HSBC Global Asset Management (Switzerland) Ltd., Bederstrasse 49, P.O. Box, CH-8002 Zurich. Paying agent in Switzerland: HSBC Private Bank (Suisse)
SA, Quai des Bergues 9-17, P.O Box 2888, CH-1211 Genève 1.
HSBC Global Asset Management is the brand name for the asset management business of HSBC Group. The above document has been approved for distribution/issue by the following entity:
HSBC Global Asset Management (France)
421 345 489 RCS Nanterre. Portfolio management company authorised by the French regulatory authority AMF (no. GP99026) with capital of 8.050.320 euros. Postal address: 75419 Paris cedex
08, France.
Offices: Immeuble Coeur Défense, 110, esplanade du Général Charles de Gaulle, 92400 Courbevoie - La Défense 4 . (Website: www.assetmanagement.hsbc.com/fr).
HSBC Global Asset Management (Switzerland) Limited
Bederstrasse 49, P.O. Box, CH-8027 Zurich, Switzerland (Website: www.assetmanagement.hsbc.com/ch)
Copyright © 2016. HSBC Global Asset Management (France). All rights reserved.
Non contractual document updated in September 2016 - AMFR_Ext_453_2016.
top related