Hang Seng Investment - Asset Class Investment Views [April 2, 2026]

Overall View

– Equities: Maintain Neutral

We are relatively optimistic about Japan and the US; maintain a neutral stance on China and emerging Asian markets; relatively pessimistic about European equities.

– USD Bonds: Upgraded from Neutral to Bullish

We are relatively optimistic about Asian investment-grade bonds and US Treasuries; hold a relatively bearish view on Asian high-yield bonds. We expect US Treasury yields to fluctuate within a range until the Fed resumes rate cuts.

– Cash: Downgraded from Neutral to Bearish

– Alternative Investments (e.g., Commodities): Maintain Neutral

In the short term, gold prices are highly volatile due to the strengthening of the US dollar, but its fundamentals support its long-term performance.

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Stocks

Mainland China

Maintain neutral. Expect no large-scale stimulus from the government, but so far, consumer inflation and retail sales have exceeded expectations. If recovery momentum can be sustained, equity sentiment should improve. Given China's substantial oil reserves and alternative energy sources, the impact of surging energy prices on the economy is expected to be manageable.

Asia (excluding mainland)

Downgraded from positive to neutral. Amid rising oil prices and a stronger dollar due to the Middle East crisis, short-term ratings are downgraded to neutral. Despite heightened volatility in the near term, corporate earnings growth remains solid. Improvements in corporate governance and strong AI-driven demand should support medium- to long-term performance.

United States

Upgraded from neutral to moderately bullishThe Middle East crisis has driven oil prices significantly higher, but the US, as a net oil exporter, is showing relatively stronger resilience thanks to its energy advantages. Since the outbreak of the Middle East crisis, the overall market has not lowered earnings estimates for large US companies.

Europe

Maintain a slightly bearish view, as earnings growth remains weaker compared to other regions. In the medium to long term, supportive fiscal policies should boost the economy.

Japan

Maintain a slightly bullish view. The economy benefits from higher domestic nominal GDP growth and improved earnings. More stimulative policies, combined with a weaker yen, may also support future earnings growth. The impact of rising oil prices remains manageable as the government has taken emergency measures to stabilize prices.

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Dollar bonds

US Treasury bonds

Maintain a slightly bullish view. The Middle East crisis has driven yields higher, providing investors with an opportunity to lock in higher interest rate levels.

US investment-grade bonds

Maintain neutral. Credit spreads have slightly widened year-to-date (YTD). Despite recent negative news in the private credit market and significant financing activities by major U.S. tech companies, which may increase volatility and pressure spreads to widen further in the short term, we believe the associated risks remain manageable.

Asian Investment Grade Bonds

Maintain a slightly bullish view. Asian Investment Grade (IG) bond spreads remain tighter compared to U.S. IG and high yield (HY), while corporate earnings and balance sheets remain robust, helping to limit downside risks. In this environment, performance is expected to be primarily driven by carry returns. Compared to other regions, Asia stands out with stronger growth momentum, further solidifying our positive outlook on its medium- to long-term prospects.

Asian High Yield Bonds

Maintain a slightly bearish view. Although the recent blended yield of high yield bonds remains attractive, recent geopolitical developments have led to spread widening, making their expected risk-adjusted returns less appealing than investment-grade bonds.

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duration

Maintain neutral, we will 2026The expectation for interest rate cuts this year has been revised to two times(originally estimated to be two to three times). We believe the Iran-related spike in oil prices is temporary, with limited impact on core US inflation. Meanwhile, based on the job vacancy-to-unemployment ratio of 0.87, the labor market should remain weak.

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Source: Hang Seng Investment, as of April 2, 2026.

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