Private banks call for defensive tilt in client portfolios amid inflation and slower growth

STRATEGISTS at private banks have turned more defensive in their asset allocation calls for client portfolios for the second half of the year, as higher interest rates and inflation raise the spectre of a hard landing for economies and slower profit growth for companies.

Most calls, as compiled by The Business Times, are in favour of defensive equities with “quality’’ income, investment-grade (IG) credit and an exposure to real and alternative assets including commodities and private market assets. Such assets may help to hedge against inflation and diversify portfolios.

Some banks, however, are positive on China and US equities, in particular. DBS Bank chief investment officer (CIO) Hou Wey Fook says the US tech sector is trading at a forward price-earnings multiple below the trough of the dot-com crash in 2000. On China, he says it still trades at a significant discount to global equities despite its outperformance this year; China equities are also “massively under-owned’‘ by global equity funds.