3Q19 Outlook: A Changing World


DBS CIO Hou Wey Fook shares how to capitalise on game-changing trends as old business models unravel
Chief Investment Office06 Sep 2019
Photo credit: AFP Photo


At the start of this year, after a bruising 4Q18, we stood out to say this was not a start of a bear market. Rather, we said it was a “tug of war” between the bulls and the bears – and that this would result in a wide-ranging, volatile market. The markets then rallied hard in 1Q, and at the start of 2Q we argued that unless we saw a comprehensive trade deal, we would not see new highs. This roadmap has played out as said.

Where do we go from here?

While we continue to see this as a “tug of war” market, there are game-changing trends to capitalise on. This quarter, we title our publication “A Changing World”.

Today, we see old business models unravelling and new secular themes emerging. For example, negative interest rates, the pervasiveness of e-Commerce, the ongoing trade war, and the Sustainability agenda will have profound implications on investing. As a result of these changes, a large chunk of the world’s equity capitalisation is under siege. We first saw e-Commerce disrupting retail. Now these new technologies are disrupting the media, telecom, auto, and financial sectors.

For sure, risks abound from these changes, but there are also exciting opportunities. Should we cringe and hold cash? With near-zero rates, this surely is not going to work.

Our call is to engage markets through long-term, multi-asset, and globally-oriented portfolios. The underlying strategy is to “barbell”: This entails stripping away sectors that are under siege from disruption and buying into companies plugged into secular growth themes, alongside holding income-generating assets.

In this issue, we detail exciting trends in cloud computing, automation, the New Defensives, and the Sustainability agenda.

Do enjoy the read!


Hou Wey Fook, CFA

Chief Investment Officer

The information published by DBS Bank Ltd. (company registration no.: 196800306E) (“DBS”) is for information only. It is based on information or opinions obtained from sources believed to be reliable (but which have not been independently verified by DBS, its related companies and affiliates (“DBS Group”)) and to the maximum extent permitted by law, DBS Group does not make any representation or warranty (express or implied) as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions and estimates are subject to change without notice. The publication and distribution of the information does not constitute nor does it imply any form of endorsement by DBS Group of any person, entity, services or products described or appearing in the information. Any past performance, projection, forecast or simulation of results is not necessarily indicative of the future or likely performance of any investment or securities. Foreign exchange transactions involve risks. You should note that fluctuations in foreign exchange rates may result in losses. You may wish to seek your own independent financial, tax, or legal advice or make such independent investigations as you consider necessary or appropriate.

The information published is not and does not constitute or form part of any offer, recommendation, invitation or solicitation to subscribe to or to enter into any transaction; nor is it calculated to invite, nor does it permit the making of offers to the public to subscribe to or enter into any transaction in any jurisdiction or country in which such offer, recommendation, invitation or solicitation is not authorised or to any person to whom it is unlawful to make such offer, recommendation, invitation or solicitation or where such offer, recommendation, invitation or solicitation would be contrary to law or regulation or which would subject DBS Group to any registration requirement within such jurisdiction or country, and should not be viewed as such. Without prejudice to the generality of the foregoing, the information, services or products described or appearing in the information are not specifically intended for or specifically targeted at the public in any specific jurisdiction.

The information is the property of DBS and is protected by applicable intellectual property laws. No reproduction, transmission, sale, distribution, publication, broadcast, circulation, modification, dissemination, or commercial exploitation such information in any manner (including electronic, print or other media now known or hereafter developed) is permitted.

DBS Group and its respective directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned and may also perform or seek to perform broking, investment banking and other banking or financial services to any persons or entities mentioned.

To the maximum extent permitted by law, DBS Group accepts no liability for any losses or damages (including direct, special, indirect, consequential, incidental or loss of profits) of any kind arising from or in connection with any reliance and/or use of the information (including any error, omission or misstatement, negligent or otherwise) or further communication, even if DBS Group has been advised of the possibility thereof.

The information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. The information is distributed (a) in Singapore, by DBS Bank Ltd.; (b) in China, by DBS Bank (China) Ltd; (c) in Hong Kong, by DBS Bank (Hong Kong) Limited; (d) in Taiwan, by DBS Bank (Taiwan) Ltd; (e) in Indonesia, by PT DBS Indonesia; and (f) in India, by DBS Bank Ltd, Mumbai Branch.