DBS is advising investors to rotate back to pandemic-proof assets, particularly technology stocks and gold. The switch to a recovery play in anticipation of vaccine discoveries, it says, is showing signs of “fatigue”.
According to DBS, the technology-heavy Nasdaq Composite Index over US small caps had peaked on Aug 26 last year. The index had subsequently undergone a sharp relative underperformance as global portfolio allocators jumped onto the bandwagon of piling into domestic plays in anticipation of vaccine discovery.“Covid-19 cases are rising while vaccination among developing countries remains slow. A delay in the return to normalcy for businesses will weigh on global growth,” say Hou and Cheang.
The momentum in positive macro data is also approaching a peak, according to the bank. At 64.7, the US ISM Manufacturing Index is looking “toppish”, it says. In fact, a retracement in the index has historically coincided with a moderation in the rally on S&P 500 Index, it adds.Thirdly, the US Treasury (UST) bond yields are retracing despite strong macro data. This suggests rising caution on the economic growth assumptions in 2021, says DBS.
Adapted from
Adapted from
https://www.theedgesingapore.com/capital/investing-ideas/rotate-back-technology-stocks-gold-says-dbs (30 Apr 2021)
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