[SINGAPORE] Investors in Singapore may want to allocate more funds to local assets, which appear resilient amid global economic uncertainty, said Deutsche Bank Private Bank global chief investment officer Christian Nolting on Friday (Jun 27).
“I think economically, (Singapore) is very nicely positioned”, he said at a media briefing on the private bank’s outlook for major economies and the various asset classes, as well as its recommended strategies for investors.
Deutsche Bank’s Singapore clients tend to hold “very well diversified” portfolios with assets spread across global markets, but have limited investments locally, he noted.
Although diversification is generally a positive strategy, investors in Singapore could consider increasing their allocation to domestic assets, he added.
Singapore is less affected by US tariffs than other countries, facing only the baseline 10 per cent rate. This is “very important” for a highly export-oriented economy, he said.
He noted promising prospects for Singapore’s real estate and stock markets.
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Jason Liu, head of the CIO Office at Deutsche Bank Private Bank, described Singapore bank equities as “very safe” assets in the current climate of global uncertainty, in that they offer a “very good” dividend yield of over 5 percent.
“We have seen a lot of (capital) inflows since the beginning of the year,” he added.
US dollar softens, equities may hold up
Since the start of the year, there has been a considerable outflow of capital from the US – but this does not necessarily mean US assets will lose attractiveness, said Nolting.
Given the euro’s strengthening against the dollar, and turbulence in the yield of European treasuries, it is clear that there has been a flow of capital from the US into Europe, he said.
A “small amount of capital” is also moving to Asia, said Liu, noting the year-to-date appreciation of the Singapore dollar, Taiwan dollar and the Japanese yen relative to the US dollar.
Nolting expects the capital outflow to continue, so the greenback could weaken a bit further over the next 12 months – but not collapse.
“I don’t think there’s a currency – at this point in time – which would replace the dollar,” he said.
Furthermore, the expected weakness of the US dollar does not mean that other US assets will become less attractive, he added.
The US continues to achieve stronger productivity growth than Europe, supporting its long-term investment appeal.
The sheer size of the US market also allows it to absorb outflows while still delivering solid performance, he said. “Even with some money flowing out, you can still have a nice performance, because it’s so much larger.”
To illustrate the disparity, Nolting noted that the total market capitalisation of Germany’s DAX 40 blue-chip index is smaller than that of a single US tech giant such as Apple.
