Market concerns over China and the US are overdone according to HSBC Asset Management.

Jane Davies, lead portfolio manager of the firm’s multi-asset fund range, says worries over US manufacturing, negative global growth rates and China are overstated.

“We don’t anticipate a global recession,” she said in a research note on Monday. “We also think that the recent market sell-off may have presented a buying opportunity for contrarian investors.”

Earlier this month Morgan Stanley hiked the probability of a recession hitting the global economy within the next year to 30% from 20%.

"While we don't believe that a global recession is likely this year, the declining impact of lower oil prices and easier monetary policy on growth starts to worry us," said Morgan Stanley economists.

That followed a warning from Citi in February, in which analysts at the investment bank said the risk of the global economy falling into a recession is rising as fundamentals remain poor.

Market sentiment has been focused on a slowdown in US manufacturing, negative global growth projections driven by falling oil prices and bond yields, and China.

Weak indicators from China’s cyclical sectors, currency and central bank policy continue to concern investors.

But HSBC's Davies says major recessions tend to be caused by tight money supply, high real oil prices and financial sector stress.

“These preconditions are not currently present,” she said.

“The main concern in the last few weeks has been around the risk of a recession in the US. While the oil sector is in recession, we can see little evidence of an economy-wide downturn."

“While the outlook for global economic growth has weakened, in our view the key issue is the extent to which weaker growth is damaging the corporate sector. 

"There has been some decline in corporate earnings, but much of it still appears confined to oil and energy," she added.

In this environment, Davies said she continues to favour equities and corporate bonds and remain cautious on developed market government bonds.