UOBAM upbeat about first-quarter Singapore earnings, US equities

FUNDAMENTAL indicators are pointing to a positive investment outlook in 2019, UOB Asset Management (UOBAM) said in a media statement on Thursday.

UOBAM is "overweight" on the Singapore market in the first quarter of 2019, citing a steady earnings outlook "led by the government's fiscal ability to support growth, a more stable property market and improved profitability of banks".

It is "slightly overweight" on equities and "slightly underweight" on fixed income in the first quarter.

Among developed markets, UOBAM is most optimistic of US equities on the back of estimated higher increases in corporate earnings. This echoes DBS's "overweight" call on US equities in the same period.

In line with its "first-principles"-based investment approach, UOBAM favours defensive sectors such as consumer staples and healthcare, and blue chips and stocks with high dividend yields.

The approach calls for a review of fundamental indicators which include global economic growth, corporate earnings, equity valuations, bond yields and recession risks.

According to UOBAM, economists and the International Monetary Fund have forecast global real gross domestic product growth for 2019 to be at above-trend levels of 3.6 per cent to 3.7 per cent.

The asset manager also expects equity returns of 10 to 15 per cent and bond returns of 4 to 6 per cent for 2019.

It also does not expect a recession in 2019 despite some market concerns.