The rising inflationary pressures and weakness in developed countries’ economies means commodities and hedge funds are the safest places for investors to park their money, at least for the time being, according to HSBC Private Bank.

“While on the surface the similarities of today’s environment and the 1970s are scary, we believe differences are strong enough to remain relatively positive in riskier assets – for the moment,” the private banking arm of UK-listed HSBC said in a strategy note.

As a result of its fears about inflation, the private bank reckons that sovereign bonds were overpriced and is therefore underweight of this asset class. “We believe credit and inflation-linked bonds offer better opportunities in this environment,” the bank said.

In the short term, HSBC Private Bank said it is neutral towards equities but more positive in the longer term. It is broadly bullish about commodities, especially agriculture-related sectors.

“We believe concerns in the global economy are shifting from systemic financial market risks to inflationary pressures in coming months following aggressive central bank action,” the note said.

It expects the global economy  to continue to cool down, affected by muted consumer spending appetite in Group of Seven economies.

The only economic region that the bank expects to see a rising pace of economic activity this year is the Middle East and Africa. Other regions will either continue at the same pace of growth – such as Latin America – or cool down, as in the US and Western Europe.