HSBC reported in a note released Monday that its machine learning-driven analytics are currently indicating a risk-on stance for equities in the wake of recent market volatility.
Cycle assessment
The bank's equity cycle selector, named ECCLES, identifies the prevailing market regime as Late Cycle. According to HSBC's interpretation, this regime remains constructive for US equities and for growth-oriented stocks.
Pullback outlook
HSBC's pullback-oriented models bolster that view, pointing to a low probability of declines in global equities and in US equities over the coming month. The bank conveys this as supportive evidence that the recent volatility has not, in its models, shifted markets into a more defensive posture.
Regional and valuation preferences
Within emerging markets, HSBC's relative indicator model, REMI, favors Korea, Taiwan and MENA equities. Separately, the bank's valuation model, MLV, identifies Korea as among the cheapest markets in its coverage set.
Model coverage and purpose
The suite of machine learning tools cited by HSBC spans equities, fixed income and foreign exchange markets. The bank uses these models to interpret market signals and to help support investment decision-making.
Context and limitations
HSBC framed the assessment as coming after a volatile few weeks for markets. The note did not specify which specific volatility events prompted HSBC to review its model signals.
This analysis reflects the content provided in HSBC's Monday note and focuses on the signals from the bank's named machine learning models: ECCLES, REMI and MLV.