Investors need to innovate and be agile to be able to navigate the ongoing global uncertainties, according to HSBC Global Private Banking.

Its Investment Outlook for the second quarter of 2025 highlighted that this agility was essential to manage short-term risks and achieve long-term investment targets.

The Innovate or Stagnate report outlined how heightened trade frictions and accelerated, AI-led innovation were among the major changes that were challenging markets, and high net worth (HNW) and ultra HNW clients therefore needed to adapt quickly.

It also set out HSBC Global Private Banking’s four priorities going into Q2 2025, which included global AI adopters and electrification, as it felt technology-driven earnings growth was moving from AI enablers to AI adopters, and rising energy consumption was driving investments in electricity generation capacity.

The bank was also prioritising multi-asset and active fixed income strategies, seeking diversification across asset classes, locations, and sectors for improved risk-adjusted returns, while capitalising on active management being better suited to the busy news flow.

It felt that private equity was well placed to benefit from mergers and acquisitions, and the AI boom will help smaller firms, while hedge funds will be able to exploit volatility and relative value opportunities.

Finally, the bank stated that Asia’s diverse markets presented a “broad range of opportunities”, especially in Singaporean, Japanese and Indian stocks, and Chinese stocks were expected to benefit from AI-led innovation and reduced regulatory risks.

“While the global economy is facing challenges, it remains resilient as government and corporate spending is supporting economic activity, while innovation in AI is boosting productivity,” said HSBC Global Private Banking and Wealth global chief investment officer, Willem Sels.

“Global central banks are also assisting by maintaining a monetary easing bias. The underperformance of the US in the year to date can at least in part be attributed to increased optimism in other countries and opportunities outside the tech sector.”

HSBC Global Private Banking and Wealth chief investment officer for Asia, Cheuk Wan Fan, added: “Asian economies continue to stay resilient to withstand external headwinds thanks to their robust domestic fundamentals and structural growth drivers.

“We focus on China’s rising AI innovation champions, structural growth leaders in India and the ASEAN region, and high-quality Asian credit.”

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