Asia equities: what if bond yields go higher? The Flying Dutchman

Research evidence excerpt

Asia equities: what if bond yields go higher? The Flying Dutchman

19 May 2026

The Flying Dutchman EquityAsia Strategy

Asia equities: what if bond yields go higher?

◆ Rising bond yields are not (yet) negative for stocks as profit Herald van der Linde*, CFA

growth is strong; but if yields go higher, they may start to bite Head of Equity Strategy, Asia Pacific The Hongkong and Shanghai Banking Corporation Limited

heraldvanderlinde@hsbc.com.hk

◆ Still, Asia is now more sensitive to a rise in yields than a +852 2996 6575

decade ago and markets are more crowded Prerna Garg*

Asia Equity Strategist

The Hongkong and Shanghai Banking Corporation Limited

◆ If yields keep rising, yield and quality stocks are set to prerna.garg@hsbc.com.hk

outperform +852 9831 6901

Adam Qi*

Associate, Equity Strategy

Growth versus rates. Asian equities are in a tug of war between growth and yields. The Hongkong and Shanghai Banking Corporation Limited adam.x.l.qi@hsbc.com.hk

The former has dominated the narrative since the start of the year; however, the story +852 2288 9311

may now shift to yields as they start to rise. Varun Pai*

Associate

Lessons from history. We examine recent history and global markets in 1999, when Bangalore

new technology (e-commerce) gave rise to an investment boom. That is a bit similar

to today. We conclude that: * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

not registered/ qualified pursuant to FINRA regulations

◆ Growth counts. If growth is strong, modest increases in yields do not have to

derail equities. For now, growth remains robust.

◆ Yield levels count. Asia is now more sensitive to yields than a decade ago,

when rates were extraordinarily low.

◆ Expectations. Unanticipated shifts in yields (like now) are a bigger risk, or when