Investing when interest rates rise

Investing when interest rates rise

Interest rates are influenced by your country’s central bank. They may be adjusted to stimulate or curb a country's economic growth.

Understanding how the rise and fall of interest rates affect businesses, individuals (like you and me) and ultimately your investments, will help you ride the wave with confidence.

What happens when interest rates rise

In general, high interest rate cools an overheated economy and reduces inflation.

Higher borrowing costs impedes business plans

Cost for businesses to borrow money is increased, thus businesses will likely halt or reduce growth projects.

Hunt for quality bonds and companies in Financials sector

Savings are more attractive due to higher deposit rates; individuals may consider investing in assets, businesses or sectors that will benefit from rising interest rate.

Sectors and assets that benefit from rising interest rates

Investment opportunities in the midst of a high interest rate environment:

What happens when interest rates fall

In general, low interest rate stimulates economic growth and increases inflation.

Cheaper for businesses to borrow

The cost for businesses to borrow money is reduced, thus businesses will likely embark on growth projects such as business acquisitions and expansions and product developments.

Invest for better returns

Savings are less attractive due to lower deposit rates; individuals are likely to invest spare cash into investment instruments for better returns.

Sectors that benefit from falling interest rates

Investment opportunities in the midst of a low interest rate environment:


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Risk Disclosure and Important Notice

The information herein is for information only. DBS accepts no liability whatsoever for any direct, indirect or consequential losses or damages arising from or in connection with the use or reliance of this publication or its contents

Investment involves risks. The information provided is based on sources which DBS Bank Ltd. and DBS Bank (Hong Kong) Limited believe to be reliable but has not been independently verified. Any projections and opinions expressed herein are expressed solely as general market commentary and do not constitute solicitation, recommendation, investment advice, or guaranteed return. The above information does not constitute any offer or solicitation of offer to subscribe, transact or redeem any investment product. Past performances are not indicative of future performances. You should make investment decisions based on your own investment objective and experience, financial situation and particular needs. You should carefully read the product offering documentation, the account terms and conditions and the product terms and conditions for detailed product information and risk factors prior to making any investment. If you have any doubt on this material or any product offering documentation, you should seek independent professional advice.

Securities trading is an investment. The prices of stocks fluctuate, sometimes dramatically. The price of a stock may move up or down and may become valueless. It is as likely that losses will be incurred rather than profits made as a result of trading stocks. The investment decision is yours but you should not invest in any stock unless you have taken into account that the relevant stock is suitable for you having regard to your financial situation, investment experience and investment objectives.

Customers should be aware that the prices of the Callable Bull / Bear Contracts and Warrants may fall in value as rapidly as they may rise and holders may sustain a total loss of their investment. DBS Bank (Hong Kong) Limited does not provide securities advisory service. Any person considering an investment should seek independent advice on the investment suitability when considered necessary.

Bonds are investment products and some of them may involve derivatives. The investment decision is yours but you should not invest in the bonds unless DBS Bank (Hong Kong) Limited who sells them to you has explained to you that the bonds are suitable for you having regard to your financial situation, investment experience and investment objectives.

Foreign exchange involves risk. Customers should note that foreign exchange may incur loss due to the fluctuation of exchange rate.

Funds are investment products. The investment decision is yours but you should not invest in the fund unless the intermediary who sells it to you has explained to you that the fund is suitable for you having regard to your financial situation, investment experience and investment objectives.

The information provided above have not been reviewed by the Securities and Futures Commission of Hong Kong or any regulatory authority in Hong Kong.

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