BY AUDREY RAJ
HSBC Private Banking’s Lina Lim is putting the money down on four secular growth opportunities

HSBC Private Banking is betting on four high conviction themes focused on secular growth opportunities linked to policy priorities, long-term trends and the global search for yield. Its chief investment office is recommending investments in areas like digital transformation, sustainable investing, Asia’s new growth path and extending the recovery in a low yield world. Within these, smart mobility, automation, security, healthcare innovation, China’s green revolution, climate change, infrastructure, and sustainability make up the bank’s diversified basket of investment themes. ‘Specific to Asia, I would say Asia is just catching up on the sustainability themes,’ said Lina Lim, the regional head of discretionary and funds for Asia Pacific, in an interview with Citywire Asia. ‘We have seen client interests in healthcare innovation, next-generation and renewable energy themes.’ HSBC prefers to invest in multi-year structural themes that are expected to pan out over time particularly over the mid- to long-term investment horizons. Like most wealth managers, the bank has also seen an acceleration in the adoption of digital technology in service consumers amid the extended period of lockdowns, social distancing, and remote working. What’s more, a lot more products and services are now being offered and transacted through digital tools and platforms. ‘Now more than ever before, companies are opening up new markets and creating new revenue streams globally through digitally-enabled platforms and tools,’ Lim said. ‘This is revolutionary and will have significant financial implications to companies around the world.’ In the digital transformation space, HSBC believes the cybersecurity industry will likely benefit from the use of more digitally secure systems across video software, mobile apps, e-commerce, and videogames. Furthermore, 5G will increase the pace of technological improvements, making automation an even more compelling alternative to manual processes, as well as enable smart city innovation.











In China, the bank continues to invest in the country’s secular growth opportunities focused on semiconductors, advanced technology, automation, and the net-zero transition. The fund selector said while the pandemic has had a profound impact on investors’ behaviours, it was also a wake-up call to the world on the vulnerability of the healthcare system. As such, HSBC launched a new theme, the ‘rise of S in ESG’, focusing on social UN Sustainable Development Goals like #3 Good Health and Well-being, #5 Gender Equality and #10 Reduced Inequalities. It expects new treatments, devices, diagnostics, digital health and services to reduce overall healthcare costs. Lim said sustainability awareness among private banking clients has been rising rapidly in recent years amid the global initiatives to fight climate change. Furthermore, the shock of the Covid-19 pandemic further prompted many clients to reassess their roles in society and their relationship with the environment. In fact, the pandemic disruptions offered a catalyst to induce clients to learn more about ESG investing, as they are looking for more sustainable and resilient investment returns in uncertain times, Lim said. ‘We believe more and more investments will be channelled into these areas in the next couple of years in my opinion. We have also been working with clients to identify multi-year structural themes and look for suitable thematic funds or ETFs to represent these themes through our rigorous due diligence process,’ she added. In 2021, over 25% of new additions to HSBC’s product suite have been ESG ETFs covering clean energy, water, gender equality, green bond, for example. ‘There are definitely interests among clients to invest in thematic ETFs,’ Lim said. ‘Thematic ETFs are cost-effective and provide quick market assess.’ When weighing active versus passives for thematics, Lim recommends investors have exposure to both in their portfolios to optimize risk-adjusted returns. She said passive works well only for certain themes, not for all. For beta exposure in a broad and well-defined sector, perhaps the passive route is a better choice. ‘However, if you want to invest into micro or emerging themes where there will be huge dispersions among companies - for example in artificial intelligence, electric vehicle, and green mobility - active selections will help avoid idiosyncratic risks,’ she added.