The bank believes that risk assets, including equities and corporate bonds, will do well, given the low likelihood of a blanket lockdown, along with the further easing of restrictions on the movement of people.

Risk assets, including equities and corporate bonds, are expected to do well, given the low likelihood of a blanket lockdown, along with the further easing of restrictions on the movement of people, DBS chief investment officer Hou Wey Fook said at a media briefing on Thursday

«Unprecedented stimulus policies, which had put a floor to risk assets in 2Q, are now translating into economic recovery,» Hou said, citing the expansion of the global manufacturing sector, with new orders at its steepest since mid-2018.

DBS also said the upcoming U.S. presidential election would be the «single most pivotal event affecting financial markets in the final months of 2020,» in its CIO Insights publication covering the fourth quarter of 2020, titled «On the Mend,»

Growth and Income Focus

The bank continued to advocate its «Barbell Strategy,» which comprises secular-growth, income-generating investments and gold, which will take advantage of a world transitioning into a digital economy, amid an ultra-low rate environment. It also advocated favoring Asia and European credits, as BBB/BB-rated credits in Asia and Europe are expected to outperform. 

According to the bank, its Barbell portfolio has returned in the high single digits so far in 2020 (as at 19 September).

Key Trends 

The bank pointed to the Technology sector's resilience despite weak macro data, and highlighted semiconductor ecosystems as a theme to invest in, given the wave of digitalization. «As the backbone of digitalization, upstream technology’s future is bright, driven by the rising use of AI, IOT, and 5G,» DBS said.

The bank is optimistic about «pandemic victims» like hotels, restaurants, integrated resorts, and beauty industry equities for potential reversion to mean, given the positive developments in the race to discover a vaccine.

DBS also pointed to major post-pandemic trends like the diversification of supply chains, rise in alternative meats, shift to more flexible working arrangements, and the continued growth of e-commerce and e-sports, which it said «will be the key drivers of growth in the future as consumers and companies adapt to the new normal.»