DBS Bank Ltd., September 2025
Excerpt from DBS Bank Ltd. report.
Report Summary
Staying invested is crucial, as attempts to time the market often result in missed opportunities. The CIO’s Barbell portfolio, focused on income-generating assets and secular-growth equities, delivered a strong 16.3% net return year-to-date.
Global growth is expected to slow, but a US recession is not the base case thanks to AI-driven capex, fiscal stimulus, and lower rates. This macro environment favors risk assets.
Technology remains a top conviction, with AI adoption boosting corporate profitability. Asia ex-Japan equities offer compelling value, trading at a significant discount and poised to benefit from fund inflows and structural themes.
Portfolio risks include market overconcentration, expensive valuations, and earnings uncertainty, especially due to tariffs. Diversification and downside protection are recommended.
Asset allocation for 4Q25 favors US technology, Asia ex-Japan equities, gold, hedge funds, and private assets for balanced risk-reward. Bonds are preferred over equities due to attractive yields and defensive qualities.
Sector strategies: Overweight US technology, neutral US equities overall, underweight US energy. In Europe, attractive valuations and fiscal stimulus support further gains. In Japan, corporate reforms and resilient domestic sectors are key. Asia ex-Japan is favored for its valuation, earnings resilience, and policy support.
Commodities have underperformed, except for gold and select agricultural products, which benefited from policy uncertainty and tariffs.
Alternatives like gold, private assets, and hedge funds play an increasingly important role in diversification, resilience, and portfolio efficiency. Recent regulatory changes expand access to private markets.
The report emphasizes the need for intentional diversification to transform volatility into long-term advantage, recommending a hybrid portfolio approach over traditional models.
Above is an excerpt from a report by DBS Bank Ltd. Clients of DBS Bank Ltd. can be the first to access the full report from the DBS Bank Ltd. website: https://go.dbs.com/sg-cio
