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UOB Asset Management Breaks From Rivals by Favoring Bonds Over Stocks

UOB Asset Management Breaks From Rivals by Favoring Bonds Over Stocks

(Bloomberg) -- UOB Asset Management Ltd. has advice for multi-asset investors: pick bonds over stocks and U.S. equities over Asian shares.

With expectations for muted growth, the money manager recommends a strategy to retain and accumulate capital through bond yields and stock dividends. Corporate and Asian debt are reasonably valued and opportunities to buy on declines should arise, Anthony Raza, the head of multi-asset strategy, said at an event Thursday in Singapore.

“With moderate global economic growth and therefore consequently modest earnings growth, we don’t expect further monetary easing this year,” Raza said in a statement. “As such, most asset classes are unlikely to replicate last year’s strong performance.”

For the first quarter, UOB AM is overweight on fixed income and alternative investments, neutral on equities and underweight cash and commodities, according to Raza.

UOB’s preference for bonds versus stocks differs from the likes of Barclays Plc and JPMorgan Chase & Co. The British bank cites a lack of further upside in debt markets, while JPMorgan says an expected global economic pickup will spur only mediocre bond returns. And the preference for U.S. over Asia in stocks is in contrast to views of firms like UBS Asset Management and Nuveen Asset Management, which see more potential in shares outside the U.S.

“We remain on the lookout for regions like Asia to catch up on performance but as of early 2020, the U.S. continues to look like the safer bet,” UOB AM said, referring to equities.

UOB Asset Management Breaks From Rivals by Favoring Bonds Over Stocks

Raza said he would shift his stance on Asian equities to positive from neutral only if there’s improvement in the global economy and trade, as well as some easing of the U.S. dollar. UOB was underweight on the region’s stocks in the second half of 2019.

His preference for U.S. shares is because UOB AM anticipates resilient corporate profits there. Within Asia, “Singapore equities in particular offer attractive valuations and growth potential supported by the government’s fiscal flexibility,” he said.

Within fixed income, UOB AM likes developed-market, investment-grade credit.

To contact the reporter on this story: Joanna Ossinger in Singapore at jossinger@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Cecile Vannucci, Ravil Shirodkar

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