HSBC manager warns extreme bond prices are at risk of shock

LONDON: The record surge of investors into bonds increases the risk of a sudden sell-off that could reverberate across asset classes, according to HSBC’s $500 billion global asset management unit.

Instead of paying a "very high price” for negative returns in fixed income, Joseph Little, who helps run multi-asset teams at the U.K. firm, says clients should buy global equities. The economic pessimism priced into bonds is so high that even if the growth outlook improves modestly, the reversal in defensive assets could be dramatic, he said.