Economic shocks, EV batteries in 2025 and VC catalysts

WHAT HAPPENED THIS MONTH?

In this edition, we examine the big picture shocks that could influence global economic growth in the years ahead. We also explore advances in EV battery technology and assess the impact of higher shipping costs on consumers.

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Elsewhere, we look at the rise of artificial intelligence — from venture capital funding to AI’s impact on the wider tech sector.

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So, what were the key talking points? Read on to find out…

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Talking Point: Where are the upside shocks to the global economy?

Theme: All nine themes

The world often feels like a worrying place, with downside risks aplenty — from the pandemic to global conflicts and the shock of higher interest rates. And yet, through all these challenges, the global economy has kept rolling.

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When thinking about the bigger picture, it’s easy to be nervous about the future. But there are plenty of good things happening under the surface, across the global economy, which are worth keeping in mind.

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In their latest ‘Gamechangers’ report, James Pomeroy and the team explored the upside risks that could influence potential growth in the coming years. And there are plenty of reasons for hope:

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?? Energy Transition: Renewables continue to gain share in power generation.

?? Disruptive Technology: AI overinvestment could help accelerate supporting tech such as data centres, quantum computing and robotics.

?? Future Cities: Rising urbanisation rates could support underlying economic growth, healthcare and utilities.

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Our thoughts…

The risks to the global economy over the coming decade are much more finely balanced than we may often hear about — with many commentators focusing just on one of these areas in isolation. In practice, these factors will push against each other — some lifting potential growth and others pulling it down.

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Clients of HSBC Global Research can explore the full list of downside and upside risks in our latest ‘Gamechangers’ report:

FULL REPORT ?? https://www.research.hsbc.com/R/84/XXQXcTbdW7MDrW

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Talking Point: Can car makers boost EV battery power?

Theme: Future Transport

Within the world of battery technology, the focus has long been on using cathode materials to improve energy density and achieve longer driving ranges. But we are now also seeing rapid advances in anode applications.

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The use of silicon anodes was limited to just two EV models but this year expanded to six in the Korea EV lithium-ion battery (LIB) supply chain. More importantly, silicon anodes are now being used in mass market models, rather than just luxury EVs, which could lead to significant demand growth in the coming years.

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Yushin Park and Will Cho examined what advances in battery technology could mean for the auto sector in their latest report. They identified three key challenges which silicon anodes will need to overcome:

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?? Improving ICE (Initial Coulombic Efficiency)

? Addressing volumetric expansion / swelling issues

?? Reducing costs

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Our thoughts…

Silicon anodes are crucial for the fast charging of electric vehicle batteries, an important factor for keeping consumers happy and increasing EV penetration rates. We think 2024 is an inflection point as auto makers are now starting to use silicon anodes in mass market models.

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Clients of HSBC Global Research can read our full report on Korea EV LIB materials from the following link:

FULL REPORT ?? https://www.research.hsbc.com/R/84/cVGsWvmdW7MDrW

Dig deeper: Read our latest EV Global Roadmap looking at a pivotal year for the EU auto industry (https://www.research.hsbc.com/R/84/rvsCrK9dW7MDrW ) and most recent China EV Tracker looking at demand in the Chinese EV sector (https://www.research.hsbc.com/R/84/CFcwCq6dW7MDrW )

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Talking Point: What are the potential catalysts for a venture capital recovery?

Theme: Disruptive Technology

Our proprietary HSBC Venture Investment Tracker shows a slowdown in venture capital (VC) activity recently. This chimes with our recent Funding the Future survey, which also suggested near-term caution.

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Longer term, however, VC investors remain optimistic. And there are plenty of high-growth sectors attracting their attention – including artificial intelligence (AI), HealthTech and Life Sciences.

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So what would it take to spark a recovery in VC activity? Data Scientist Shiva Joon, CFA and team have been looking at the evidence:

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?? VC investments in the US have outpaced global activity this year

?? The US is also leading the charge in exit deals globally

?? In EMEA, the UK leads in AI ventures with 1,319 VC-backed AI startups

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Our thoughts…

Rate cuts from the US Federal Reserve should boost VC activity, as investors have identified them as the biggest tailwind. Expectations of a US “soft landing” would also likely support VC deal recovery and help valuations improve, in our view.

Clients of HSBC Global Research can read our in-depth analysis of the state of play in VC and high-growth sectors in our dedicated report:

FULL REPORT ?? https://www.research.hsbc.com/R/84/NQNwhRNdW7MDrW

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So, there you have it, the main thematic talking points for this month. But there’s still plenty more to discuss. Clients can see the rest of our talking points in our full report below.

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FULL REPORT ?? https://www.research.hsbc.com/R/10/GtTgnwzvpDcX

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