Global Investment Trends: Franklin Templeton Survey Insights, HSBC's Strategy Shift, And Rising U.S. Emergency Savings
Birgul COTELLI, Ph. D.
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The investment market is shaped by changing strategies, economic resilience, and shifting investor priorities. Franklin Templeton Institute’s latest Investment Management Survey highlights key trends influencing asset allocation and risk appetite worldwide.
Meanwhile, HSBC investors are signaling support for CEO Georges Elhedery’s strategic retrenchment in investment banking, reinforcing a broader industry trend toward capital efficiency.
In the U.S., financial security is improving, with 30% of Americans increasing their emergency savings in 2024—a promising sign amid economic uncertainty.
Disclaimer: the Newsletter Investors Board is not an investment advice. The sole purpose of its publication is informative.
Franklin Templeton’s Global Investment Survey: Insights On Market Trends And Strategy
The Franklin Templeton Global Investment Management Survey for 2025 provides a comprehensive outlook on financial markets, asset allocation strategies, and economic trends. Conducted in November 2024, with market data updated as of January 31, 2025, the survey gathers insights from over 200 portfolio managers, chief investment officers, and directors of research, offering a data-driven perspective on the evolving investment landscape.
Economic Outlook: Stability Amid Modest Growth
According to the survey, global economic growth is expected to align with consensus forecasts, with regional variations. The U.S. economy is projected to grow at 2.5%, higher than the Federal Reserve Board's estimate of 2.1% but below the 2.7% projection by the International Monetary Fund (IMF). In contrast, Europe is expected to see sluggish growth at 0.5%, while China’s GDP growth is forecast at 3.5%, falling short of the 4.6% estimate from the IMF.
Core Personal Consumption Expenditures (PCE) inflation is predicted to stabilize around 2.75%, remaining slightly above central bank targets. The U.S. unemployment rate is expected to end the year at 4.25%, in line with Bloomberg’s consensus forecast of 4.3%. Meanwhile, the U.S. dollar is anticipated to appreciate modestly over the year.
Equities: A Strong but Selective Market
The S&P Global 500 Index is forecast to close the year between 6,400 and 6,800 points, with earnings growth projected at 7.5%, below the 14% consensus estimate. Key equity investment trends include:
Favorable sectors: Financials, technology, industrials, and energy.
Preferred regions: Bullish sentiment on India and Japan.
Stock selection factors: Free cash flow yield, return on invested capital, and return on equity.
Risks: Geopolitical uncertainty and earnings below expectations.
The survey also indicates a continued broadening of the U.S. stock market, with small-cap, value, and growth stocks expected to perform well.
Fixed Income: Shorter Duration Bonds to Benefit
Declining interest rates on the front end of the yield curve present opportunities for shorter-duration fixed income instruments. Key insights include:
High-yield default rates are expected to rise modestly from 1.4% to 2.5%.
Municipal bonds remain attractive for their high-quality, tax-free yields.
Investment-grade credit spreads are projected to widen slightly, ending 2025 at 95 basis points (bps) from 79 bps currently.
Emerging market debt spreads may increase to 275 bps, slightly below their 10-year average of 319 bps.
Primary risks: Geopolitical instability and central bank policies.
Private Markets and Alternative Investments
The survey highlights significant opportunities in private equity, private credit, and real estate:
Private Equity: Investors are focusing on secondary private equity markets, offering valuation advantages and enhanced liquidity.
Private Credit: With a significant volume of debt maturing over the next few years, private credit managers see strong opportunities, especially in direct lending, distressed assets, and real estate debt.
Real Estate: Attractive sectors include multi-family housing, industrial warehouses, life sciences, medical offices, and neighborhood retail.
Federal Reserve Policy and Interest Rate Forecasts
Interest rates are expected to decline gradually throughout 2025, contingent on inflation and employment trends. The survey forecasts:
Federal Funds Rate to end the year at 3.75%, down from 4.25%.
10-Year U.S. Treasury Yield to stabilize around 3.88%.
30-Year Fixed Mortgage Rates to decline from 7.0% to 5.75%.
Investment Strategies for 2025
Given the expected market conditions, Franklin Templeton’s investment professionals recommend:
Equities: Diversification across value and growth stocks, with a focus on free cash flow yield and high-return sectors.
Fixed Income: Favoring shorter-duration bonds due to stable but high interest rates.
Private Markets: Exploring opportunities in secondary private equity, direct lending, and real estate debt.
Alternative Investments: Allocating capital strategically to mitigate risks and optimize returns.
Conclusion
The 2025 Global Investment Management Survey provides a nuanced perspective on economic conditions, market risks, and investment opportunities. While equity markets are expected to show strength, selective positioning will be key. Fixed income markets favor shorter-duration securities, while private and alternative investments present compelling opportunities. Investors should remain vigilant of geopolitical risks and central bank policies as they navigate the evolving financial environment.
HSBC Investors Back CEO's Investment Banking Retrenchment
Investors in HSBC are throwing their support behind CEO Georges Elhedery’s strategic decision to streamline the bank’s investment banking operations. While the move aligns with HSBC’s long-term focus on high-growth Asian markets, it comes at a time when U.S. President Donald Trump’s deregulatory policies are expected to stimulate capital markets activity.
A Strategic Shift in Investment Banking
HSBC, once a global powerhouse spanning more than 100 countries, has been steadily reducing its footprint over the past decade. The latest restructuring involves shutting down its mergers and equity capital markets teams in both the Americas and Europe. Four investors, including two among HSBC’s top 20 shareholders, have publicly backed the move, arguing that it allows the bank to concentrate resources on its most profitable divisions.
A significant driver behind this shift is the mounting pressure from geopolitical tensions and U.S. tariffs, which could dampen global trade and reduce earnings for trade finance providers like HSBC. Investors expect Elhedery to reallocate capital to Asian markets, where economic growth and trade dynamics are more favorable.
“Geopolitics are making life more difficult for lots of businesses that operate globally,” said Alex Potter, investment director for European equities at HSBC. “Even with multiple purchases over decades, almost no foreign banks have achieved meaningful market share in U.S. equity investment banking.”
Financial Implications and Cost Savings
Elhedery unveiled further details of his vision for HSBC when it reported its full-year results on February 19, where he outlined key cost savings and restructuring benefits. Media reports suggest potential savings between $1.5 billion and $3.8 billion, achieved through management cuts and additional role reductions.
Despite these cost-saving efforts, HSBC has continued to perform well in the stock market. Its London-listed shares have gained 11.5% year-to-date, following a 20% rise in 2024.
From a valuation perspective, HSBC’s return on tangible equity (ROTE) stood at 19.3% in the first nine months of 2024, yet the bank traded at a price-to-book multiple of 1.04, significantly lower than Morgan Stanley’s 2.16 multiple, despite the latter's 18.8% ROTE. This valuation gap indicates HSBC’s need to shift from empire-building to profitability-driven operations, an approach Elhedery aims to solidify.
Challenges and Internal Struggles
While investors largely support HSBC’s restructuring, the internal response has been more turbulent. Employees in affected departments worry about job security, while those in adjacent teams fear they could be next. A senior executive noted that the bank’s China-based wealth management unit is preparing for potential operational adjustments.
HSBC has already signaled plans to scale down its digital wealth project Pinnacle and its credit card business in China, reflecting the difficulties of expanding in the Chinese financial sector. However, strategic growth consultancy CIL Management Consultants’ managing partner, Alex Marshall, believes this is not about choosing between China and Western markets.
“Asian capital is a significant growth story. This is a huge prize, and HSBC has done well out of it,” Marshall said. “Europe’s share of global capital flows, by contrast, is pretty limp.”
Looking Ahead
With an analyst forecast projecting $31.6 billion in full-year profit, HSBC remains on a solid financial footing. However, questions remain about the long-term effects of its retrenchment from U.S. and European investment banking. While some fear that the decision could limit HSBC’s market reach, others see it as a necessary step toward sustainable profitability.
As Elhedery navigates this transition, all eyes will be on HSBC’s financial results and whether the cost-cutting measures can drive the desired valuation uplift. Investors remain optimistic, but employees and market analysts will be watching closely to gauge the full impact of these strategic decisions.
30% Of Americans Increased Their Emergency Savings In 2024
Despite persistent economic challenges, an increasing number of Americans have managed to boost their emergency savings over the past year. According to a recent Bankrate report, 30% of adults have more emergency savings now than they did a year ago, reflecting a growing financial resilience among consumers.
Encouraging Trends in Financial Preparedness
While inflation and high interest rates continue to weigh on household budgets, more than half of Americans now report having greater emergency savings than credit card debt—an improvement from previous years. This marks a significant shift in financial habits, indicating a stronger commitment to long-term security.
“The number of households reporting more savings than one year ago has been steadily increasing since we began measuring it in 2022, and for the first time, it exceeds those reporting less savings than the prior year,” said Greg McBride, CFA, chief financial analyst at Bankrate. “This is evidence that as the pace of inflation has slowed, more Americans have been able to make progress in building or rebuilding their emergency savings.”
Economic Factors at Play
The aftermath of the COVID-19 pandemic saw soaring inflation, making it difficult for many Americans to stay afloat financially. At the same time, the Federal Reserve’s aggressive interest rate hikes over the last four decades increased the cost of borrowing, further straining household budgets. Although inflation has eased, it remains above the Fed’s 2% target, keeping economic conditions uncertain.
“Just like consumers, the Federal Reserve wants to see further cooling of inflation,” said Mark Hamrick, senior economic analyst at Bankrate.
While the Fed cut its benchmark rate by a full percentage point in the second half of 2024, policymakers remain cautious about future adjustments. Federal Reserve Chair Jerome Powell recently stated that the Fed is in no rush to further ease monetary policy, emphasizing a data-driven approach.
The Importance of Emergency Savings
Financial experts stress that having an emergency fund is critical for financial stability. Research has shown that even a few hundred dollars in savings can significantly reduce the likelihood of missing rent or mortgage payments or delaying medical care due to financial constraints.
Despite the progress, 53% of U.S. households still lack an emergency savings account, according to a study by the AARP Public Policy Institute. This issue is particularly prevalent among older Americans, with half of those over age 50 reporting no emergency fund, making them more likely to tap into retirement savings during financial hardships.
How to Build an Emergency Fund
Experts recommend that individuals prioritize setting aside three to six months’ worth of expenses. Those who are the sole earners in their households or self-employed should consider saving even more to cover potential income disruptions.
With interest rates still elevated, financial experts suggest using high-yield savings accounts to maximize returns. Although rates have declined slightly from their 2024 peaks, they still offer nearly 5% in interest, compared to just 1% in 2022.
“While the Fed putting the brakes on interest rate cuts stinks for those with debt, it is welcome news for savers,” said Matt Schulz, chief credit analyst at LendingTree. “Your best move is to keep building that emergency fund.”
Conclusion
With ongoing economic challenges, the steady improvement in emergency savings is a positive development. While financial uncertainty remains, experts agree that taking proactive steps today—such as building an emergency fund—can provide a stronger foundation for future stability.
“While we don’t know what the economy will look like in the coming months, one thing is certain: building a stable financial foundation today will help you weather whatever storm might be ahead,” Schulz said.
Strategic Investing, Efficiency, And Financial Resilience
The investment market undergoes a shift toward strategic capital efficiency, economic resilience, and adaptive financial planning.
Franklin Templeton’s latest survey highlights a stable yet selective market, favoring growth in technology, financials, and industrials, while fixed income and alternative investments offer diversification opportunities.
Meanwhile, HSBC’s restructuring signals a broader industry trend toward capital optimization, with investors backing a leaner, profitability-driven model.
At the consumer level, the rise in emergency savings among Americans reflects improved financial preparedness despite ongoing economic uncertainties.
Investors who prioritize adaptability and efficiency by reinforcing the importance of strategic investment positioning, risk management, and financial resilience will be best positioned for sustained growth.
Disclaimer: the Newsletter Investors Board is not an investment advice. The sole purpose of its publication is informative.
Sources: Franklintempleton.com Reuters.com Cnbc.com
Franklin Templeton International Monetary Fund Federal Reserve Board Bloomberg S&P Global HSBC Morgan Stanley CIL Management Consultants Bankrate AARP LendingTree Reuters CNBC
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3dVery interesting trend about the increase of savings in 2024. This has to be constrated with the increase in credit card deliquencies recently 👇🏻 https://www.economist.com/finance-and-economics/2025/02/20/why-american-credit-card-delinquencies-have-suddenly-shot-up