1、 Disclosures&Disclaimer This report must be read with the disclosures and the analyst certifications in the Disclosure appendix,and with the Disclaimer,which forms part of it.Issuer of report:The Hongkong and Shanghai Banking Corporation Limited View HSBC Global Research at:https:/ THIS CONTENT MAY
2、NOT BE DISTRIBUTED TO THE PEOPLES REPUBLIC OF CHINA(THE PRC)(EXCLUDING SPECIAL ADMINISTRATIVE REGIONS OF HONG KONG AND MACAO)We argue that upside risks to Asian equities are much greater than downside risks;this asymmetry in payoffs makes us constructive on Asian equities We foresee c18%upside for M
3、SCI Asia ex Japan;macro factors remain important;sector and country rotation is key We highlight the key investable ideas for 2019 We are constructive on Asian equities in 2019.Current consensus is for low-teens EPS growth in 2019.Valuations are broadly attractive and,with ROEs rising,PEs could rise
4、,too.Downside risks are higher-than-expected US rates and weaker-than-expected China growth.Key to the outlook will be the trajectory of US rates in 2019,which HSBC economists expect to peak after another two hikes into mid-2019.If USD strength slows and currency stability becomes a less immediate t
5、hreat,policy makers across the region may be emboldened to focus on restoring growth momentum.China has announced tax cuts and spending on infrastructure.This could also support a recovery in growth elsewhere in the region.Interest rate shifts impact sector and country rotation.These changes in inte
6、rest rate and growth expectations are likely to be accompanied by significant shifts in sector and country performance across Asian equities,driven by differences in equity duration and cyclicality in sectors.We advocate a gradual increase in cyclical exposure and consequently raise Industrials to o
7、verweight(OW)from underweight(UW),and Materials to overweight from neutral(N).We cut Consumer Staples and Consumer Discretionary to underweight(from neutral).We cut Financials and Communication Services to neutral(from overweight).We turn less defensive and increase exposure to cyclicals.Weightings.
8、All in all,the combination of 1)good earnings growth,2)low valuations,and 3)the prospects of a peak in US interest rates makes us constructive on Asian equities.We believe there is an asymmetry in pay-offs:there is a substantial upside if our constructive view is right,but less downside if we are wr
9、ong.We forecast c18%upside for MSCI Asia ex Japan from current levels.We are overweight China,Thailand and Singapore,and raise Korea to overweight from neutral.We lower Hong Kong to neutral from overweight.We remain underweight Pakistan and cut Malaysia,the Philippines and Taiwan to underweight from
10、 neutral.We raise Indonesia to neutral from underweight.We reiterate our key equity investment ideas for 2019,ranging from candidates for the best large-cap and small-cap ideas to sectors that could peak or bottom in 2019.We also highlight stocks that stand to benefit from long-term shifts in demogr
11、aphics across Asia.These ideas are summarised in Table 4 on page 21.8 January 2019 Asia Insights Quarterly EQUITY STRATEGY ASIA HSBC WEIGHTINGS Country/Region HSBC weights(previous)China overweight Korea overweight(neutral)Singapore overweight Thailand overweight Hong Kong neutral (overweight)India
12、neutral Indonesia neutral (underweight)Malaysia underweight(neutral)Pakistan underweight Philippines underweight(neutral)Taiwan underweight (neutral)Japan neutral Sector HSBC weights(previous)Energy overweight Utilities overweight Materials overweight(neutral)Industrials overweight(underweight)Techn
13、ology neutral Communication Services neutral(overweight)Financials neutral(overweight)Healthcare underweight Consumer Discretionary underweight(neutral)Consumer Staples underweight(neutral)Source:HSBC Herald van der Linde*,CFA Head of Equity Strategy,Asia Pacific The Hongkong and Shanghai Banking Co
14、rporation Limited .hk+852 2996 6575 Devendra Joshi*Equity Strategist,Asia Pacific The Hongkong and Shanghai Banking Corporation Limited .hk+852 2996 6592 Ji Won Kwon*Graduate Analyst,Equity Strategy The Hongkong and Shanghai Banking Corporation Limited .hk+852 2996 6621 Nishu Singla*Associate Bangal
15、ore *Employed by a non-US affiliate of HSBC Securities(USA)Inc,and is not registered/qualified pursuant to FINRA regulations More upside than downside risks 2 EQUITY STRATEGY ASIA 8 January 2019 Overview,by market Country China Korea Taiwan Hong Kong India Singapore Thailand Malaysia Indonesia Phili
16、ppines Pakistan Asia ex Japan Weight in MSCI Asia 34.8%15.8%13.0%11.6%10.9%4.1%2.9%2.8%2.7%1.3%0.0%Country weight Current overweight overweight underweight neutral neutral overweight overweight underweight neutral underweight underweight Previous overweight neutral neutral overweight neutral overwei
17、ght overweight neutral underweight neutral underweight Trading data*ADTV(USDbn)32.0 7.0 5.3 13.6 4.3 0.9 1.7 0.6 0.5 0.1 0.2 Market Cap.(USDbn)3,863 1,347 922 3,910 2,044 481 496 257 484 254 57 Key sub-sectors Financials(32.0%),Cons Disc(27.7%),Real Estate(7.7%)IT(42.1%),Financials(13.3%),Cons Disc(
18、10.6%)IT(61.0%),Financials(18.4%),Materials(10.6%)Financials(35.5%),Real Estate(26.6%),Industrials(13.1%)Financials(23.9%),IT(17.5%),Energy(14.4%)Financials(57.2%),Real Estate(17.0%),Industrials(15.8%)Energy(25.9%),Financials(20.8%),Staples(14.4%)Financials(38.0%),Staples(13.8%),Utilities(13.7%)Fina
19、ncials(50.7%),Staples(17.1%),Cons Disc(13.5%)Financials(32.3%),Real Estate(29.6%),Industrials(23.6%)Financials(59.8%),Energy(24.0%),Materials(16.1%)Financials(24.0%),IT(16.8%),Cons Disc(12.2%)Three largest stocks Tencent Holdings,Alibaba Group,China Con.Bank Samsung Electronics,Sk Hynix,Samsung Eltn
20、.Pref.Taiwan Semicon.Mnfg.,Hon Hai Precn.Ind.,Formosa Plastics AIA Group,Hong Kong Exs.&Clear.,CK Hutchison Holdings Reliance Industries,Housing Development Finance Corporation,Infosys DBS Group Holdings,Oversea-Chinese Bkg.,United Overseas Bank PTT,CP All,Airports of Thailand Public Bank,Tenaga Nas
21、ional,Malayan Banking Bank Central Asia,Bank Rakyat Indonesia,Telekomunikasi Indonesia(Persero)SM Prime Holdings,Ayala Land,Bdo Unibank Oil&Gas Development Company,Mcb Bank,Habib Bank Tencent,Alibaba,TSMC 4Q18 performance Absolute(USD terms)-10.8%-14.2%-13.7%-4.9%2.5%-7.1%-10.5%-6.2%9.4%5.2%-21.6%-8
22、.9%Relative to MSCI AxJ-1.8%-5.2%-4.7%4.0%11.4%1.8%-1.6%2.7%18.4%14.1%-12.6%Key statistics 12-mo forward PE(x)9.9x 8.0 x 12.3x 13.8x 17.4x 11.3x 13.3x 15.7x 14.4x 15.7x 6.8x 11.0 x 12-mo forward PB(x)1.3x 0.8x 1.5x 1.1x 2.5x 1.1x 1.7x 1.5x 2.4x 1.9x 1.0 x 1.3x 12-mo forward DY(x)2.9%2.8%5.0%3.4%1.7%
23、4.8%3.4%3.4%2.9%1.8%7.8%3.2%12-mo forward ROE(%)13.2%10.3%12.1%8.0%14.6%9.7%12.8%9.6%16.3%11.7%14.5%11.5%EPS growth 2019e(%)13.7%-3.2%2.0%7.5%24.5%6.9%5.7%4.6%12.5%12.4%42.7%7.6%EPS growth 2020e(%)14.2%10.3%9.6%9.0%16.0%7.6%7.4%7.5%11.5%12.1%17.6%11.9%6m earnings momentum(%)-4.4%-11.9%-4.8%-1.1%3.0%
24、-0.1%0.4%-5.3%5.1%4.0%4.1%-5.9%Reasons:We remain overweight on China.Market scepticism overlooks positives,such as steady earnings growth,policy support and reform momentum.We upgrade to overweight from neutral.Lowest expected earnings growth in Asia which we expect to surprise on the upside.MSCI Ko
25、rea currently trades at a 12-month forward PE of 8.0 x,which is a 15.1%discount to its 5-year average,making it the cheapest in the region.We downgrade Taiwan equities to underweight from neutral on relative regional basis.Valuations remain moderate,iPhone unit growth and trade tensions remain key r
26、isks.We downgrade Hong Kong equities to neutral from overweight due to weakening earnings expectations and external uncertainty from China-US trade tensions which could affect the HK economy.We remain neutral on Indian equities on low crude oil prices,market sell-off and better earnings growth expec
27、tations relative to peers.We remain overweight,our call is mainly driven by cheap valuations and high dividend yield.The country also ranks well on relative macro attractiveness.EPS growth to slow in 2019e,but this is offset by high yields.We are overweight on Thailand.Strong economic growth,low for
28、eign holdings,increasing ROEs and high dividend yield drive our view,and monetary policy is supportive.We downgrade Malaysian equities to underweight from neutral on expensive valuations and fund holdings are higher than the historical average.We upgrade Indonesia to neutral from underweight.Earning
29、s growth to be supportive but valuations indicate this is priced in already and macro headwinds expected to be less intense now.We downgrade Philippines equities to underweight from neutral.Philippines has been the worst performing ASEAN market in 2018,returning-17%,a combination of PE derating and
30、negative FX returns due to stubbornly high inflation and higher yields.We remain underweight on Pakistan equities on weak macro conditions.High twin deficits and thinning forex reserves drive our call.Source:Refinitiv Datastream,Bloomberg,HSBC.Pricing as of 2 January 2019.Note:*ADTV and market cap f
31、or the whole stock universe in the country.3 EQUITY STRATEGY ASIA 8 January 2019 Overview,by sector Financials Technology Communication Services Consumer Discretionary Industrials Consumer Staples Materials Energy Utilities Healthcare Asia ex Japan Weight in MSCI Asia ex-Japan 24.2%16.5%12.9%12.2%7.
32、0%5.1%4.8%4.6%3.5%3.0%Key sub-sectors Banks,and Insurance Semiconductors and software services,Tech hardware Wireless,Communication services,Entertainment and Media KR and CH Autos and Internet and direct marketing retail Transport,Shipbuilding Food&Beverages Steel,Coal Oil Refiners,Distributors Ele
33、ctric and Gas Utilities Generics,Hospitals Sector Radar weightings Current neutral neutral neutral underweight overweight underweight overweight overweight overweight underweight Previous overweight neutral overweight neutral underweight neutral neutral overweight overweight underweight Trading data
34、 ADTV(USDm)5,198 4,415.9 1,748.7 2,801.9 2,193.4 1,482.1 1,673.3 1,067.6 547.4 1,899.5 24,292.5 Performance 4Q18 Absolute-4.8%-12.9%-4.1%-14.7%-5.6%-3.5%-10.1%-16.5%0.3%-17.7%-8.9%Relative to MSCI Asia 4.1%-4.0%4.8%-5.7%3.3%5.4%-1.1%-7.6%9.2%-8.8%Key statistics 12 month forward PE(x)8.6x 9.4x 20.1x
35、15.3x 10.4x 21.7x 9.3x 9.0 x 13.4x 28.2x 11.0 x 12 month forward PB(x)1.0 x 1.4x 2.5x 1.8x 1.0 x 2.9x 1.0 x 1.1x 1.2x 3.2x 1.3x 12 month forward DY(x)3.9%4.0%1.7%1.5%2.8%2.2%4.0%4.6%3.4%0.9%3.2%12 month forward ROE(%)11.7%14.5%12.5%12.0%9.1%13.1%10.9%12.0%9.1%11.4%11.5%EPS growth 2019e(%)10.5%-6.1%1
36、0.5%22.0%12.1%9.5%1.8%9.2%17.8%22.1%7.6%EPS growth 2020e(%)10.2%11.3%18.5%19.6%11.3%12.1%5.1%5.0%12.6%22.7%11.9%6M earnings momentum(%)-3.2%-10.4%-11.2%-13.5%-2.2%-4.5%-1.9%3.5%-2.4%-2.7%-5.2%Reasons We downgrade to neutral owing to deteriorating dynamics and uncertainty pertaining to interest rate
37、hikes/cycle.Consensus expects 2019e earnings to grow c10.5%.We remain neutral on the sector.As global trade policies of major economies and slowing tech cycle remain big risks to watch.However,with this,now the sector enjoys attractive valuations,trading at a discount of 13%to its 5 year average.We
38、downgrade Communication Services to neutral from overweight on deteriorating sector dynamics.Our proprietary data on mutual funds relative positioning shows that they have been underweight on the sector since Dec 2013.We downgrade to underweight from neutral.It has shifted to the bottom-right corner
39、 of the rader with expensive PB multiple.We believe valuations remain elevated and earnings growth expectations might surprise on the downside.We double upgrade Industrials to overweight from underweight as it has jumped to the top left quadrant of the radar from bottom right in last quarter.The dyn
40、amics of the sector have improved with better price and earnings momentum.Mutual fund holdings in the sector have drastically fallen since Jan 2018,from being the most overweight sector to nearly neutral.We move staples to underweight from neutral.Though the RCS scores suggest that the sector is ana
41、lysts least favorite in the region,its valuations remain expensive.Mutual funds are most overweight on the sector.We upgrade materials to overweight from neutral.Consensus expects a mere 1.8%earnings growth in 2019e,which we regard as highly conservative.Valuations are attractive as it is one of the
42、 cheapest sectors in the region.We remain overweight on the energy sector.Valuations look attractive and consensus expects an earnings growth of 9.2%for 2019e.We expect this to surprise on the upside.Positive dynamics are not yet visible in terms of investor optimism for this sector;mutual fund hold
43、ings in the sector are amongst the lowest in the region.We are positive on Asian utilities and retain our overweight on the sector.Positive dynamics are not yet visible in terms of investor optimism for this sector,increasing the likelihood of positive surprises.We remain underweight on the Healthca
44、re sector as the sector dynamics have not improved while investor optimism has increased.Its the most expensive sector in the region,trading at a 12-month forward PE of 23.3x.Source:Refinitiv Datastream,Bloomberg,HSBC.Pricing as of 2 January 2019.EQUITY STRATEGY ASIA 8 January 2019 4 HSBC strategy w
45、eights Market weights Market HSBC weight(New)HSBC weight(Old)Current index End-2019 target*Upside/Downside from current China MSCI China OW OW 70 90 27.8%Korea KOSPI OW N 2,010 2,410 19.9%Taiwan TAIEX UW N 9,383 10,420 11.1%Hong Kong MSCI HK N OW 15,546 17,400 11.9%India Sensex N N 35,695 40,300 12.
46、9%Singapore STI OW OW 3,059 3,700 20.9%Malaysia KLCI UW N 1,670 1,800 7.8%Indonesia JAK COMP N UW 6,275 7,100 13.2%Thailand SET OW OW 1,575 1,800 14.3%Philippines PSEI UW N 7,761 8,600 10.8%Pakistan KSE100 UW UW 37,547 39,200 4.4%Note:OW=overweight.N=neutral.UW=underweight.Current index price as of
47、4 January 2018.*We calculate the index targets using our 2019 and 2020 EPS growth expectations,and prospective ROE change driving PE estimates for 2019.Source:HSBC estimates Asia sector radar overweight on Energy,Industrials,Utilities and Materials;underweight on Staples,Discretionary and Healthcare
48、 Source:MSCI,Refinitiv Datastream,HSBC 5 EQUITY STRATEGY ASIA 8 January 2019 HSBC strategy weights 4 Year of the Pig 6 In short 6 The macro backdrop 7 Earnings growth 12 High earnings visibility 16 Valuations and asymmetric pay-offs 17 Positioning and flow 19 Outlook for 2019 20 Key investment ideas
49、 for 2019 20 Market and sector weightings 22 Market view:Asian equity scorecard 22 Sector view:Asian sector radar 23 Appendix:Market scorecard methodology 27 Sector radar methodology 28 Countries 29 China(overweight)30 Korea(overweight)32 Singapore(overweight)34 Thailand(overweight)36 Hong Kong(neut
50、ral)38 India(neutral)40 Indonesia(neutral)42 Malaysia(underweight)44 The Philippines(underweight)46 Pakistan(underweight)48 Taiwan(underweight)50 Japan(neutral)52 Disclosure appendix 56 Disclaimer 59 Contents EQUITY STRATEGY ASIA 8 January 2019 6 In short In the Chinese zodiac,2019 will be the Year
