CIO Insights 4Q20


On The Mend
Chief Investment Office28 Sep 2020
Photo credit: AFP Photo


Dear valued clients,

We reaffirm our call to stay engaged with risk assets of equities and corporate bonds, in spite of the current global battle against COVID-19.

Since last year, we have been advocating for your portfolio to employ the Barbell Strategy – comprising secular-growth and income-generating investments – that would take advantage of a world transitioning into a digital economy, amid an ultra-low rate environment.

In this publication titled “On the Mend”, we recognise the world is now moving forward from the pandemic. Although the infection rate is not yet falling, we note lower fatality rates as well as favourable outcomes in “flattening the curve” – which lead to health care systems not being overloaded.

Hence, we see a low likelihood of another blanket lockdown. Together with further easing of restrictions on people movement, risk assets are expected to be well bid. Unprecedented stimulus policies, which had put a floor to risk assets in 2Q, are now translating into economic recovery. This is reflected in the expansion of the global manufacturing sector with new orders at its steepest since mid-2018. Improvement in the labour market, however, will take longer as traditional business models will be undergoing restructuring, in response to the world’s new normal.

In this quarterly edition, we weigh the market impact from various outcomes of the US presidential election, as well as identify winning investment themes post a vaccine discovery.

I wish you success, and a strong finish to your investing, as we approach the end of this most unusual year.

 

Hou Wey Fook, CFA

Chief Investment Officer

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