Illuminating the path of opportunities amidst volatility
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After a turbulent start to the year, we see global trade tensions easing significantly following the US-China truce. Meanwhile, continued disinflation, especially in emerging markets, is setting the stage for further central bank rate cuts in the second half of the year.
We are Overweight global equities. Policy easing worldwide, strong chances of a US soft landing and a weaker USD are supportive of risky assets. We favour diversified global equity exposure, within which we upgrade Asia ex-Japan equities to Overweight.
We expect the USD to weaken, benefitting the EUR, JPY and GBP. History shows USD weakness is positive for equities and outperformance of non-US equities. We favour 5-7-year maturities in USD bonds and upgrade emerging market local currency bonds to Overweight.
Renewed tariffs, inflation and weaker economic data are key risks. Gold and Alternative Strategies are attractive diversifiers that can also help mitigate temporary volatility.
Opportunities: Within equities, we see opportunities to invest in US software and major banks; Korea large-caps, China non-financial high-dividend state-owned entities and Hang Seng Technology Index; and Europe banks and industrials. Within bonds, consider adding to your portfolio Asia local currency bonds, UK Gilts (FX-unhedged) and US Treasury Inflation-Protected Securities (TIPS).
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Singapore dollar deposits of non-bank depositors are insured by the Singapore Deposit Insurance Corporation, for up to S$100,000 in aggregate per depositor per Scheme member by law. For clarity, these investment products are not deposits and do not qualify as an insured deposit under the Singapore Deposit Insurance and Policy Owners’ Protection Schemes Act 2011. Foreign currency deposits, dual currency investments, structured deposits and other investment products are not insured.
The information stated in this article is accurate as at the date of publication.