Sentiment supports resilient assets, finds AI poll

As investors continue to struggle with uncertain and volatile markets, a more conservative approach to portfolios seems to be shaping allocations for the months ahead.  

A poll in Hong Kong and Singapore has found that long-term capital growth is the main driver of allocation decisions for almost half (47%) of investors for the next six to 12 months, amid today's higher-for-longer interest rates regime.  

Around a quarter of investors (24%) are seeking portfolio diversification, while income, inflation protection and uncorrelated returns seem less of a focus, according to respondents. 

In terms of individual assets, investment grade credit is the most appealing for 43% of investors over the next three to six months, followed by gold (24%).

Emerging market equities and cash are of minimal interest, while global equities are off the radar for the time being, at least as far as survey respondents say.

Inevitably, however, various investment risks continue to be a worry.  

Based on the poll findings, investors are equally concerned about the possibility of deeper recessions than expected in the US and Eurozone, and also about threats of escalating geopolitical tensions globally – each of these scenarios accounted for around 30% of respondents. 

At the same time, persistent inflation is still a cause for some concern (19%), as are the potential knock-on effects from slower economic growth, especially in China (14%). 

To try to navigate the tricky and risky landscape, safe-haven assets have become more attractive over the past 12 months.  

For example, compared with a year ago, these assets are playing a more important role in portfolios for one-third of investors. For 57%, allocation to safe-haven assets is about the same as this time in 2022, with only 10% of respondents reducing exposure during this period. 

* AsianInvestor, in partnership with State Street Global Advisors, will further discuss the aggregated findings of the poll during an exclusive webinar on Wednesday 22 November, 'Rethinking allocations for a new reality'. Click here for more details.