How different asset classes will fare

How different asset classes will fare

The Sunday Times looks at how different asset classes could be affected by the US election results.

Equities: The uncertainty over the US fiscal cliff could mean weakness in equity markets in the near term, said Mr Steve Brice, chief investment strategist in Standard Chartered Bank's group wealth management unit.

"The path to resolution is not clear. In the near term, uncertainty is likely to depress corporate investment."

But equities remain StanChart's favoured asset class over the next 12 months and the weakness in equities could provide good buying opportunities, Mr Brice said.

Mr Lee Chen Hoay, investment analyst at Phillip Futures, said Singapore's equity market performance is likely to take its cue from US equities.

"In the scenario that US equities decline due to political gridlock, defensive stocks in Singapore are likely to hold up better. Singapore stocks with heavy exposure to the US would be adversely impacted," Mr Lee said.

UBS wealth management research head Hartmut Issel pointed out that President Barack Obama intends to cut oil imports and produce more oil domestically, which could be good news for Singapore rig-builders.

Bonds: "For investors searching for higher yields, we continue to advocate shorter-dated bonds to reduce interest rate risk. We prefer Asian companies which have stronger balance sheets," said Mr Michael Tan, OCBC Bank's head of premier wealth advisory and a member of the OCBC Wealth Panel.

Mr Stephen Evans, head of investment counselling for South-east Asia at ABN AMRO Private Banking Asia, noted that bond investors in the investment grade space will continue to receive low yields.

"We expect investors to search for yield in emerging markets... Managing lower credit risk in these markets will be a continuing challenge to investors searching for better yields," he added.

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