Talking Points - January 2024: Trade flows, VC funding and birth rates

WHAT IS TALKING POINTS?

Talking Points is our bitesize roundup of the best Global Research reports covering our nine key themes.

Each month, we’ll discuss the biggest talking points for each theme – from automation and disruptive technology to demographics and future cities.

WHAT’S NEW THIS MONTH?

We’ve added trade flows to our list of themes. Why? From pandemic-related spikes in demand to geopolitical disruption, global trade has experienced a turbulent few years. Our thematic research will track key trends and examine the potential impact as trade evolves.

Elsewhere, we explored where venture capitalists are investing, looked at the impact of falling birth rates on economic policy, and considered the outlook for US sectors in an election year.?

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

Talking Point: Will global trade recover?

Theme: Trade Flows

Worldwide exports of goods and services contracted an estimated 0.7% last year, but could global trade be in for a recovery this year?

To answer this question, Shanella Rajanayagam considered the outlook for trade and global supply chains in her flagship ‘Trade in 2024’ report. But while there are some positive signs, Shanella also highlighted a number of reasons to proceed with caution:

?

?? Higher interest rates

?? Geopolitical conflicts

??? Uncertainty amid elections

??? Rising protectionism

?? Climate issues

?? “Grey swans” – events that are possible and knowable but considered unlikely

Our thoughts?

These potential downside risks all underline the importance of building business resilience. Against this backdrop, supply chains are set to continue to evolve. And while there are some early signs of reshoring, it could take time for these shifts to fully bear out at the macro level.

Clients of HSBC Global Research can discover our full outlook for trade in 2024 by reading Shanella’s dedicated report from the following link:

FULL REPORT ?? HERE

Talking Point: Where are venture capitalists investing?

Theme: Disruptive Technology

Venture capital investments hit an all-time high in 2021, before falling substantially in 2022 and into 2023 as high policy rates increased the cost of capital. However, as 2023 progressed, there were signs that VC activity slightly improved. So, are we out of the woods yet?

To find out, Shiva Joon, CFA and Rajesh Kumar took a closer look at volumes, valuations, verticals and the emerging spaces that have been catching VC investor attention. Of particular interest was…

??Generative AI, which has attracted more than USD32bn in VC investments since 2022 and continues to garner unprecedented interest.

??Biopharma, where the emergence of advanced computing power, new treatments and novel therapeutics are all capturing investor attention.

??Sustainability, which remains a key theme for VC investors in Asia (especially on topics like Semiconductors and CleanTech).

Our thoughts?

VC is an important source of funding for potentially transformative technologies and businesses. Successful investments can become competitors for public companies and may enter the public markets themselves. As such, insights into VC can prove useful to investors in public markets.

Clients of HSBC Global Research can read Shiva and Rajesh’s full ‘Funding the future’ report from the following link:

FULL REPORT ?? HERE

Talking Point: What do falling birth rates mean for the global economy?

Theme: Demographics

Back in 2022, we suggested that if nothing changes, the world’s population could be on course to halve by the end of this century. However, while global birth rates were expected to rebound after the COVID-19 pandemic, the data for 2023 suggest that things have gotten worse. Much worse.

The question then is what this means for the global economy. In his latest demographics report, James Pomeroy explained how ‘the baby bust’ may eventually force governments into one of three policy changes aimed at protecting public finances:

?? Higher taxes

?? Worse healthcare or pension provision

?? Raising the retirement age

Our thoughts?

In a busy election year, the nature of fiscal policy looks set to come more into focus. Demographic change, which is now happening rapidly, looks likely to impose new constraints on the choices governments make about taxation and spending in the years to come.

Clients of HSBC Global Research can find out what this decline in birth rates could mean for policymakers by reading James’ full report from the following link:

FULL REPORT ?? HERE

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.

FULL REPORT ?? HERE

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