HSBC global CIO Willem Sels said US equities are not as expensive as they appear
and valuations still do not fully reflect an AI-driven productivity and earnings
upswing. He noted the US–Europe P/E gap has narrowed but multiples have yet to
price an AI-led structural investment cycle; semiconductor names are
particularly discounted and skepticism over 2027 earnings forecasts should fade
as companies provide concrete order flow and guidance. Sels remains broadly
bullish, saying markets have repeatedly shrugged off shocks because economic and
corporate resilience has outpaced expectations and governments and firms have
acted proactively. He added that AI adopters show stronger revenue, earnings and
margin growth—especially in the US—signaling tangible productivity gains. The
main market risk is a sharp rise in bond yields; he flagged the 10-year US
Treasury around 5% as a potential trigger for volatility and warned markets have
become compact about low bond volatility.
