Global Equity Data Monitor：EM sees some relief

 Highlights of the data  Equity funds saw small outflows last week, from both DM and EM (see charts below). However, outflows from EM equity funds eased significantly following the US Fed’s decision to keep interest rates on hold. Indeed, broad GEMs funds posted their first inflows in 13 weeks, whilst EMEA equity funds saw their first weekly inflow in 20 weeks. Outflows from Asian equity funds eased further last week (see GEM fund flows: Redemptions from EM funds eased). Year-to-date EM equity funds have seen outflows equal to 7% of AUM, vs 1% inflows to DM funds. Key data points 1. The global equity market fell 4% the past week (ending 24 Sept), as investors refocused on growth concerns following the FOMC’s decision to keep rates on hold. Eurozone was the worst performer in USD terms (-7%) with Germany and Spain falling more than 8%. India (-0.4%), Hong Kong (-2.5%) and the US (-3%) were relative outperformers (page 8) 2. High dividend yield stocks continued to outperform in the developed world last week having struggled earlier in the year. They have now outperformed for the past two months in both the US and Europe, beating their respective benchmarks by 1% over the past two weeks. We see a contrarian opportunity in high yield stocks given their attractive valuations and our forecast for a gradual rise in long bond yields (see Global Equity Strategy: Who’s afraid of the Fed?) (page 13) 3. Investor sentiment remains very weak with our aggregate sentiment index still in buy territory. However, there are signs that sell-side analysts are turning more positive on some markets. The average recommendation consensus score for Europe has improved over the past month to reach its highest level since the start of the year (page 40) 4. Our economists have cut their 2016 global GDP growth forecast to 2.6% from 2.8% (see Global Economics: The waiting game). Unsurprisingly, the biggest downgrades have been to the commodity producers in the emerging world, with the aggregate EM forecasts falling from 4.8% to 4.3%. Europe is the relative bright spot with growth surprising positively in 1H 2015. We are overweight Europe in our global strategy portfolio as we believe that we are at the beginning of a multi-year earnings recovery (page 54) Global Equity Data MonitorEM sees some relief Equity Strategy Global 27 September 2015 Ben M Laidler Global Equity Strategist HSBC Securities (USA) Inc. +1 212 525 3460 ben.m.laidler@us.hsbc.com Daniel Grosvenor* Strategist HSBC Bank plc +44 20 7991 4246 daniel.grosvenor@hsbcib.com View HSBC Global Research at: http://www.research.hsbc.com *Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulations Issuer of report: HSBC Securities (USA) Inc. Disclaimer & Disclosures 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 HSBC views compared to consensus* Country HSBC Consensus Country/Region US UW OW UK UW OW Eurozone OW UW Japan N UW EM OW UW Brazil UW UW China OW UW India N UW Russia N UW Key Views: OW Europe (Earnings surprise) and EM (Multiple expansion) OW Cyclicals and Financials Source: HSBC, EPFR Global. *Note: Consensus rating are EPFR global funds active weights compared to history, where positive Z score is OW and negative Z score is UW Equity fund weekly flows as percentage of Regional equity fund flows as % of AUM Source: EPFR Global Source: EPFR Global -8.0%-6.0%-4.0%-2.0%0.0%2.0%Last WeekLast Month Last 3 MonthsYTDEM EquitiesDM Equities-0.6%-0.4%-0.2%0.0 %0.2 %0.4 %0.6 %0.8 %Japan WesternEuropeGlob alGEME MEA La t-A m A si a exJapanUSALast Week Flow (% of AuM)3 Month Average Global Equity Data Monitor Global 27 September 2015 2 abcHighlights of the week’s data 1 Latest equity strategy reports 3 HSBC Regional Recommendations 4 HSBC Sector Recommendations 5 This week’s calendar 6 Performance 7 Regions/countries 8 Global sectors 11 Top stocks by region* 12 Investment styles 13 Disaggregation of MSCI Index weights 15 Region-sector matrices 16 Indexes vs. earnings 17 Valuations 19 Regions/countries 20 Sector neutral PEs 22 Global sectors 23 Top stocks by region* 25 Earnings 26 Earnings season analysis 27 Consensus 12M forward EPS change 28 Earnings growth forecasts – regions/countries 29 Earnings revision ratios – regions/countries 30 Earnings growth forecasts – global sectors 31 Earnings revision ratios – global sectors 33 Earnings revision ratio – Top s