BIZ: Invest in fixed income, defensive stocks and gold
PETALING JAYA: Investors should look closer at safer asset classes such as fixed income, defensive stocks and gold amid more downside risks going forward, fund managers and analysts said.
Hong Kong-based Lipper head of research Eric Wong said he was not optimistic on what’s coming ahead for the global economy, noting that it would take at least six to nine months before the economic stimulus packages took effect.
Capital preservation and low-volatility investment should remain the priority, he said.
“In the short term, government bonds seem to be the safer investment,” Wong told StarBiz, adding that global equities markets should reach their bottom when property prices stopped dropping and started to stabilise.
Areca Capital Sdn Bhd chief executive officer Danny Wong is also recommending investment in government bonds as well as money markets.
For stocks, his preferred sector at the moment is high dividend-yield stocks such as Public Bank Bhd and Tanjong Plc.
For the next three to six months, Wong said the stock market would continue to have downside risk.
“Sellers may outweigh buyers. But after the dust settles (maybe in six months), investors should switch to higher beta stocks that are trading below their intrinsic values,” he told StarBiz.
Wong predicted that the stock market in the second half would outperform the first half, while recovery was expected to be only from 2010 onwards.
AmInvestment Bank Bhd retail funds director (funds management) Ng Chze How said he was more upbeat on gold and gold-related stocks.
“There is a good chance gold price would return to US$1,030 per ounce peak level,” he said, adding that investors should consider a multi-asset portfolio due to cheaper valuations.
OSK-UOB Unit Trust Management Bhd chief investment officer Jason Chong agreed on the solidity of gold as a safe haven in times of uncertainty.
“If you are concerned that the US dollar will depreciate, you should buy gold to hedge,” he said, while also recommending gold-related stocks.
“In my view, the US dollar will depreciate in the long term. Once the global market stabilises, the US dollar will weaken.”
Areca’s Wong concurred that in the next three to five years, Asian currencies might appreciate more than Western currencies as European countries and the US struggled with higher budget and fiscal deficits.
OSK-UOB’s Chong is also advising investors to go for defensive stocks.
“There is much uncertainty (in the market) but there is also a lot of value in the market. If you look at stocks at today’s value, there are a lot of stocks that give you more than 6% yields.
“So, it makes sense to invest in high dividend-yielding stocks,” he said.
