1Q19: Tug of War

DBS CIO Hou Wey Fook discusses if it is the start of a bear market for equities, how to maximise risk-return, and new investment themes
Chief Investment Office18 Dec 2018
Photo credit: AFP Photo

What a year 2018 was!

It is highly unusual that in the same year, all asset classes – including equities, bonds, and commodities – register negative returns. Normally, in a year where uncertainty mounts, government bonds and gold post positive returns on “flight-to-safety” flows. This was not the case last year.

Global equities underwent a roller-coaster ride, aided on the upside by strong US corporate earnings while hampered on the downside by escalating trade tensions and Federal Reserve rate hikes. US President Donald Trump’s frequent tweets certainly did not help to alleviate volatility. On asset allocation, our year-long Overweight stance on US over Europe, and Overweight cash from 2H18 served us well. Our thematic calls, including Overweight US Technology relative to other sectors, did well. In addition, Real Estate Investment Trusts (REITs) and dividend plays in Asia outperformed their underlying indices. However, Financials lagged.

For 2019, the ongoing tug of war between bulls and bears is likely to result in a highly volatile, non-trending market. In this publication, we posit the following:

  • Why this is not the start of a bear market
  • Why China and Asian markets are attractive
  • How to ride the “Live, Work, and Play” transition
  • How to seek winners in ageing and Millennial trends

We have also laid out the exciting opportunities of the Greater Bay Area – a clustering of talent, capital, and high value-added industries across Hong Kong, Macau, and nine Chinese cities in the Pearl River Delta.

Do enjoy the read, and I wish you a very successful year of investing!


Hou Wey Fook, CFA

Chief Investment Officer


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