Investors can still profit
Even in an uncertain climate, steady income is possible, writes John Cremer
With low growth prospects and historically low interest rates, private investors in Hong Kong have to work a little harder than usual to make a reasonable return on their money. But even in a climate of uncertainty, there are still plenty of options to achieve a steady
5 per cent plus per annum, without venturing into high-risk territory, or waiting for your ship to come in.
"Within the fixed-income universe, we recommend selected bank credits, emerging market bonds, and high-yield bonds," says Fan Cheuk-wan, managing director and head of research, Asia-Pacific, for Credit Suisse Private Banking. "On equities, we remain positive on high-dividend stocks, which are more defensive vehicles, but offer yield for investors seeking steady returns at controlled risk."
Here, there are benefits of diversification within an equity portfolio and the prospect of a reliable income. With little sign of interest rates being bumped up, gold is also expected to maintain its strength over the next six to 12 months, as a direct result of quantitative easing measures and the precious metal's appeal as a hedge against inflation.
Where appropriate, Fan would also advise investors
to deploy excess cash to buy undervalued yet fundamentally attractive equities. In some cases, the valuations are "compelling" compared to other asset classes.
"Overall, we favour US equities due to the relative resilience of the US economy and corporate earnings," Fan says. "And some Asian equities offer crisis-low valuations and strong secular growth drivers."
