4Q24 key investment takeaways: in a sweet spot

4Q24 Investment Summary

Macro Policy

Economic Outlook

Equities

Credit

Rates

Currencies

Alternatives

Commodities

Thematic focus: ASEAN equities

Defensive sectors: Our analysis of previous rate cutting cycles suggests that Utilities, Consumer Staples, and Healthcare tend to outperform (on a three-month basis) after the initial rate cut. In addition to these sectors’ inelastic consumer demand, the likes of Utilities provide above-average dividend yield of c.3.0% (vs c.1.4% for the S&P 500), which are attractive for income-seeking investors.

ASEAN equities: Against global headwinds, ASEAN continues to sustain strong growth. Resilient domestic demand backed by tight labour markets and stable prices, robust tourism and a recovery in exports buoyed by China+1 have been key growth drivers. Lower rates and a weaker dollar, alongside China’s new stimulus measures, will bring further tailwinds for ASEAN equities.

Asia REITs: Asia REITs are prime beneficiaries of rate cuts given their high gearing and sensitivity to funding costs. Lower financing costs as the Fed continues policy easing will enhance the profitability of REITs, and their dividend distributions to investors.

Gold: Gold has a broadly inverse correlation with the dollar, which is expected to weaken as the Fed continues lowering rates. Escalation of geopolitical tension and continued buying by global central banks will be tailwinds for the haven asset.

Key highlights of our tactical calls for the coming quarter are:

Cross Assets – Maintain preference for bonds over income equities

Equities – Time for ASEAN equities to shine

Bonds – Prevailing tight credit spreads not a concern in higher rate environment; maintain “barbell” approach in 1-3Y segment and 7-10Y segments

Alternatives – Hedge funds and private assets provide source of additional alpha, gold set for further highs

4Q24 Global Tactical Asset Allocation (TAA)

Per triwulan

Per tahun

Equities

Underweight

Neutral

US Equities

Overweight

Europe Equities

Underweight

Japan Equities

Neutral

Asia ex-Japan Equities

Overweight

Fixed Income

Overweight

Underweight

Developed Markets (DM) Government Bonds

Overweight

Underweight

Developed Markets (DM) Corporate Bonds

Overweight

Neutral

Emerging Markets (EM) Bonds

Underweight

Neutral

Alternatives

Overweight

Gold

Overweight

Private Assets & Hedge Funds

Overweight

Cash

Underweight

Neutral

TAA breakdown by asset class (Medium risk profile) TAA breakdown by asset class chart

Source: DBS

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About DBS

DBS is a leading financial services group in Asia with a presence in 19 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank’s “AA-” and “Aa1” credit ratings are among the highest in the world.

Recognised for its global leadership, DBS has been named “World’s Best Bank” by Global Finance, “World’s Best Bank” by Euromoney and “Global Bank of the Year” by The Banker. The bank is at the forefront of leveraging digital technology to shape the future of banking, having been named “World’s Best Digital Bank” by Euromoney and the world’s “Most Innovative in Digital Banking” by The Banker. In addition, DBS has been accorded the “Safest Bank in Asia“ award by Global Finance for 15 consecutive years from 2009 to 2023. DBS Indonesia is ranked second in the top as World’s Best Bank in Indonesia for three consecutive years from 2020 to 2022.

Established in 1989 as part of the Singapore-based DBS Group, PT Bank DBS Indonesia (Bank DBS Indonesia) is one of the banks with the longest history in Asia. Currently operating 1 Head Office, 13 Branch Offices, 16 Assistant Offices and 4 Functional Offices and 3,011 active employees in 15 Major Cities in Indonesia, Bank DBS Indonesia provides comprehensive banking services in the corporate, SME and consumer banking segments that focuses on the customer experience to 'Live more, Bank less'. We also see a purpose beyond banking and are committed to supporting our customers, employees and the community towards a sustainable future.

PT Bank DBS Indonesia is licensed and supervised by The Indonesian Financial Services Authority (OJK), and an insured member of Indonesia Deposit Insurance Corporation (LPS).

DBS is committed to building lasting relationships with customers, as it banks the Asian way. Through the DBS Foundation, the bank creates impact beyond banking by supporting businesses for impact: enterprises with a double bottom-line of profit and social and/or environmental impact. DBS Foundation also gives back to society in various ways, including equipping underserved communities with future-ready skills and helping them to build food resilience.

With its extensive network of operations in Asia and emphasis on engaging and empowering its staff, DBS presents exciting career opportunities. For more information, please visit www.dbs.com.