Bloomberg News

HSBC, Seeing 2012 Slowdown, Turns to 5-Year Treasuries, Credit

December 12, 2011

Dec. 12 (Bloomberg) -- HSBC Holdings Plc plans to boost its holdings of five-year Treasuries as it seeks to buy safer assets in 2012 amid forecasts for a “sharp and protracted” slowdown in the new year.

Europe’s biggest bank by market value will also bolster its holdings of high-yield credit and switch out of developed-market equities and commodities such as oil and industrial metals, the London-based bank’s asset-allocation unit said in a research note today.

“We are bracing for economic hardship in 2012,” Fredrik Nerbrand, London-based global head of asset allocation, wrote in the note. “Our leading indicators have been in deep contracting territory since early this year, and we see few signs of improvement. Against this backdrop, we are rebalancing our strategic portfolio in favor of lower risk.”

Yields on five-year Treasuries fell four basis points to 0.86 percent at 3:37 p.m. London time.

The notes now make up 10 percent of the bank’s three-year view asset allocation while investment in U.S. 10-year debt will be cut to 10 percent, according to the bank.

Investment in high-yield credit will be increased to 22.5 percent of the bank’s portfolio, while gold will account for 15 percent, according to the note.

--Editors: Mark McCord, Nicholas Reynolds

To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net


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