James Cheo, Chief Investment Officer for Southeast Asia and India at HSBC Private Banking and Premier Wealth, speaks with The Global Private Banker about his insights on how Asia’s affluent can adjust portfolios to rising rates, complex geopolitics, and structural trends, combining disciplined conviction with agile responses and ESG-driven strategies.
At a time when global markets are unsettled by sticky inflation, shifting monetary policy, and geopolitical uncertainty, Asia’s wealthy face critical allocation decisions. James Cheo, overseeing some of the region’s most affluent portfolios at HSBC Private Banking, believes choices in the next 12–18 months could shape returns for years.
From cash to bonds: why fixed income is back in focus
With US rates at multi-decade highs, many wealthy investors Asia have held excess cash. Cheo warns this could drag on long-term performance. “With markets increasingly speculating about shifts in US monetary policy, many investors are re-evaluating the role of fixed income”, he said. “High-quality bonds today offer both attractive yields and the potential for capital gains if rates fall.”
Bonds also provide “powerful optionality”. Should equities pull back, they serve as a ready source of funds to rebalance at better valuations. “Fixed income appears inexpensive by historical standards, while equities trade at elevated multiples. For long-term investors, this is an opportunity to capture yield, retain flexibility, and preserve the option to redeploy capital before the window closes”, Cheo explained.
Beyond 60/40: private markets and adaptive diversification
While the traditional 60/40 portfolio model faces challenges in today’s fragmented, inflation-prone world, investors are increasingly looking to evolve it. One of the ways could be by incorporating private markets and more dynamic risk frameworks. “Private equity can complement listed equities by accessing growth opportunities that are often less correlated with daily swings. Private credit can augment bonds by offering attractive yields and structural protections that behave differently in rising rate environments.”
HSBC’s CIO office stress-tests portfolios against shocks ranging from liquidity squeezes to geopolitical disruptions.
“The question is less about whether 60/40 is dead, and more about how we evolve it—incorporating private markets and dynamic risk frameworks to meet the challenges ahead.”
Geopolitics and building defensive portfolios
Geopolitical tensions—from US-China relations to tariffs and supply chain redirection—are long-term drivers of both volatility and opportunity. “Tariffs are not just a trade issue—they can feed directly into inflation, potentially forcing the Fed to stay restrictive longer than markets expect,” Cheo said.
He emphasises building portfolios with defensive buffers. “Gold, hedge funds, and private market strategies can provide partial hedges, but the most effective defence is genuine global diversification. Overexposure to one market or region is the greatest risk when politics and policy shifts are unpredictable.” For investors, this means spreading allocations widely so a policy shock in one country does not cascade across the entire portfolio.
Southeast Asia is also positioned to benefit from these shifts. Vietnam, Indonesia, and Malaysia are attracting capital as firms diversify manufacturing bases away from China. “This supply chain reconfiguration is a secular trend that investors should pay attention to—not just as a risk but as a structural growth opportunity,” he noted.
ESG, next-gen investors, and the values shift
Sustainability and intergenerational wealth transfer are reshaping Southeast Asia’s investment landscape. “In this region, interest in ESG continues to grow. Clients are increasingly asking not ‘whether’ to integrate ESG, but ‘how’ to do it effectively,” Cheo said, highlighting strong interest in energy transition, resource efficiency, and social inclusion.
Asia’s younger wealthy are driving this push. “Next-generation investors view wealth through a multidimensional lens. They want portfolios that perform financially and contribute to broader societal goals.” HSBC is embedding ESG into product design and leveraging philanthropy advisory to align family wealth with long-term causes such as climate resilience, education, and healthcare.
Cheo adds that conviction and agility are equally critical in this environment.
“Conviction comes from deep research and structural clarity; agility comes from recognising when the facts shift and having the discipline to move with them,” he said.
The opportunity after tariffs
Cheo believes the years beyond 2025 will test investors’ ability to remain disciplined while seizing structural opportunities. As tariff effects fade, Southeast Asia could benefit from renewed capital expenditure in supply chain infrastructure, green energy, and the digital economy. If monetary conditions ease, it could create room for regional central banks to support domestic demand and credit growth – reinforcing Asia’s long-term role as an engine of wealth creation.
“The most effective defence isn’t a single asset—it’s global diversification,” Cheo concluded. The point, he argued, is not to search for one hedge but to build portfolios resilient enough to absorb sudden shocks—whether from tariffs, politics, or inflation—while still capturing growth where it emerges.
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