HSBC weighs in on Asian stocks

MANILA, Philippines - The Hongkong and Shanghai Banking Corp. Ltd. (HSBC) is underweight on the Philippine equity market, along with the markets of Malaysia and Hong Kong.

In a report, HSBC head of equity strategy for Asia Pacific, Herald van der Linde said they are, however, overweight on Indonesia, China and Thailand.

“At the sector level, we prefer financials, consumer discretionary and energy,” Van der Linde said.

Foreign institutional investors (FIIs) have continued to buy Asian equities in August,though at a slower pace than the previous month.

Overall, Asian equities have received $3 billion in August, with Korea getting $1.4 billion, Taiwan ($800 million) and India ($700 million) receiving the most inflows.

Indonesia equities recorded net outflows this month.

Total foreign inflows stand at $36.7 billion year-to-date for the region.

Meanwhile, mutual funds turned more bullish, buying $8 billion worth of Asian equities in the past four weeks (ending Aug. 20) compared with net inflows of $1.1 billion in the previous four weeks, according to EPFR Global.

China remains the most over-owned market in the region, followed by India.

The HSBC expert said that funds have cut down their overweight exposure in the Philippines and Thailand and added to it Indonesia, though they remained underweight there.

Among developed markets, funds have preferred Singapore over Hong Kong. Malaysia remains the least owned market in the region.

Meanwhile, global funds have also turned overweight on China, showing renewed confidence in its growth story. Thailand and Korea are the most-loved Asian market by global mutual funds.

“Funds are neutral on Philippines and India and underweight on other markets in the region. Singapore is the least-owned market by global funds,” he said in the report.

Consumer staples remained the most loved sector in the region, followed by materials and energy.

Mutual funds’ exposure to the energy sector is at a five-year high.

Funds have turned overweight on industrials while they have maintained their neutral exposure in consumer discretionary.

Telecoms, financials and IT are the least owned sectors in the region.