DBS Optimistic Investment In Risky Assets Will Be More Conducive In 2024

JAKARTA DBS Chief Investment Officer (CIO) Hou Wey Fook projects that economic growth in the first quarter of 2024 will be positive. Especially seeing growth opportunities in the technology industry, secondary needs, and luxury goods.

Meanwhile, the US Central Bank or the Fed previously started tightening policies with a total increase of 525 bps in 16 months, making it the fastest and most aggressive interest rate hike cycle in history.

Hou Wey Fook said this creates challenging conditions for equity and bonds over the past year.

According to him, in the midst of market dynamics, the Barbell Strategy with a focus on bonds that generate income on the one hand and secularly growing equity on the other can be a solution.

As for the Barbel Strategy, DBS recorded a 15 percent profit compared to the reference index of 14 percent as of December 29, 2023.

In addition, the Hou Wey Fook DBS projects that the first quarter of 2024 will be more conducive to risky assets. "Apart from the prediction that the US benchmark interest rate will peak as inflation slows down and the delay in monetary tightening by the US Central Bank (the Fed)," he explained in Jakarta Wednesday, January 24, 2024.

As for equity, Hou Wey Fook advises investors to focus on quality growth in the technology sector and secondary needs. As for credit and bonds, the best position (sweet spot) is on credit with an A/BBB rating with a period of 3-5 years.

However, Hou Wey Fook advises investors to remain cautious with credit risks that can accumulate even after rising interest rates.

Hou Wey Kook conveyed the growth of the luxury goods industry (Luxury) which recorded the Majemuk Annual Growth Rate (CAGR) of 6 percent between 1996 and 2019. This growth was driven by globalization and the strength of Gen Z spending.

"DBS CIO views this industry as having a strong appeal and a considerable investment potential," he explained.