Equities are a better risk-reward play than bonds, which are looking expensive after this year's big rally, DBS chief investment officer Hou Wey Fook wrote.[SINGAPORE] Stocks still look particularly attractive in a world of ultra-low bond yields, according to South-east Asia's largest bank DBS Group Holdings.
Equities are a better risk-reward play than bonds, which are looking expensive after this year's big rally, chief investment officer Hou Wey Fook wrote in his fourth-quarter asset allocation report. He recommends dividend shares and gold as well as hybrid European AT1 securities. Institutional funds"have little choice but to turn to equities", Mr Hou wrote."As the trend of ever-lowering bond yields continues on the back of a renewed cycle of policy easing by global central banks, other higher-yielding asset classes have risen to be the next ‘bond proxies.'"
Investors have been navigating a tricky path this year as the US Federal Reserve pivoted from rate-hike plans to rate cuts, other global central banks became more dovish, geopolitics reared its head in the likes of the UK, Italy and Iran, and as the US-China trade war ramped up. Global stocks have lost US$1 trillion in value this week amid a stream of weak US and European economic data, with the MSCI ACWI down about 2 per cent in the period.