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HSBC Private Bank has begun recommending clients to invest between 1-5% of their wealth in nuclear power. According to the head of global strategy for HSBC, Fredrik Nerbrand, nuclear power is the only sustainable means of electricity. Nerbrand is also recommending to steer clear of other renewable energy stocks such as solar because of their dependence on government subsidies in a time when budgets are stretched. Advice from financial experts and recent utility stock market performance is helping to rebuke the long standing myth that any company that builds a new nuclear plant will be penalized by Wall Street and investors.
HSBC Private Bank Goes Nuclear
By Chris Vellacott
LONDON (Reuters) - HSBC Private Bank is recommending weightings of 1-5 percent in nuclear power to clients without ethical objections, as subsidy-dependent renewable energy stocks are too exposed to political risk.
Fredrik Nerbrand, head of global strategy at HSBC’s private banking arm, said nuclear power was the “only sustainable” means of electricity generation.
“We are buying nuclear energy in all its forms,” he said, adding he did not favour sectors such as solar energy on account of their dependence on government subsidies at a time when state budgets are stretched, rendering them exposed to political risk.
Nerbrand also has reservations about gold, which has returned more than 21 percent this year to trade above $1,000 an ounce.
“I fail to see the long-term value of gold from an investment perspective,” he said, adding the commodity should be viewed as a hedge against downside risk to dollar-denominated investments.
Nerbrand is advising wealthy clients that the recovery in the world economy is gathering momentum and the time is right to move into “riskier assets” such as corporate credit, hedge funds and emerging markets.
But he remains particular about which emerging markets are worth a punt, favouring China and Brazil over Russia, which is beset with political risk, and India, which he says has overheated.
“Russia is basically related to oil and I’d rather just buy oil,” he said.
The risk of rising consumer prices in the medium term is low because high unemployment rules out a wage-price spiral, but money printing by governments is likely to lead to higher asset prices favouring real estate and commodities, he said.
In contrast, liquid assets and cash are expected to underperform with central banks maintaining interest rates at record lows. “Central banks will talk tough but act soft with regards to inflation,” he said.
