HSBC Focused Fund has been enjoying a good run over the last 6 months, being placed in top quartile over this period. Neelotpal says sharp focus on 4 key themes and meaningful overweight positions in them is helping drive performance.
Top 4 themes that are driving HSBC MF’s equity preferences:
1. Discretionary consumption
2. Consumer tech (platforms)
3. Select manufacturing, and
4. Financialization
Within financials, preference is towards non-lending businesses including asset management, exchanges, insurance. Within lending, NBFCs are relatively overweight compared to banks.
Earnings results for 2QFY26 which have now started coming out will likely remain in single digit growth zone. Neelotpal expects 3rdand 4th quarters to start showing material earnings growth momentum, which can set the base for a healthy mid-teens earnings growth number for FY27.
Earnings growth momentum is key for markets to break out of their sideways grind and get into another bull run.
On the global front, flight to safety has usually meant flows into USD, US Treasuries and gold. In this phase of global uncertainties, flight to safety is happening only into gold. Lack of flows into USD can cause it to continue weakening, which generally benefits emerging markets.
For us to make the most of this coming increase in EM allocations, earnings momentum is critical as that’s what will finally get FIIs back in a big way.