HSBC held an investment outlook briefing for the first half of 2023 today, predicting that global GDP will grow by 1.8% in 2023 (picture provided by HSBC)

[Reporter Wu Xintian/Taipei Report] HSBC Bank will hold an investment outlook briefing for the first half of 2023 today. HSBC Bank predicts that global GDP will grow by 1.8% in 2023, and it is expected that the Federal Reserve will raise interest rates by 0.5 percentage points in the last day of February 1. , and then pause interest rate hikes, this year the federal funds rate will remain unchanged at a high of 4.875%.

HSBC predicts that the strong tightening policies of central banks will slow global GDP growth from 3.0% in 2022 to 1.8% in 2023, while the global consumer price index will slow from 8.4% in 2022 to 6.6% in 2023.

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HSBC Global Private Banking and Wealth Management Asia Chief Investment Director Fan Zhuoyun said that the peaking of US interest rates and slowing inflation are beneficial to the performance of the bond market.

She pointed out that the U.S. interest rate hike cycle is coming to an end. It is expected that the Federal Reserve will raise interest rates by 0.5 percentage points for the last time on February 1, and then pause interest rate hikes; the federal funds rate is expected to remain unchanged at a high of 4.875% this year , the Federal Reserve will cut interest rates by 0.25 percentage points in the second and third quarters of 2024 after the core inflation in the United States falls further.

Fan Zhuoyun said that the inflation situation in Asia is milder than that in Europe and the United States, so the central bank can maintain a more moderate monetary policy.

Against the background of the global economic downturn in 2023, Asia outside Japan is expected to be the only region whose GDP growth will accelerate. It is estimated that the growth rate will rise from 3.5% in 2022 to 4.3%.

Fan Zhuoyun further stated that in the past 75 years, only 9 years have seen the simultaneous decline of stocks and bonds, and in the following year when both stocks and bonds fell, the market can recover the lost ground.

Therefore, after the sharp correction of asset prices last year, the long-term expected returns have improved significantly. When the unfavorable factors of interest rate hikes and inflation are fully absorbed by the market, the low valuation will attract funds to return to the market.

Among asset classes, bond yields have surged last year, giving them the biggest improvement in long-term expected returns relative to stocks and cash.

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