Speaking in Singapore yesterday at a briefing for the UBS 2016 House View, Tan Ming Lin, Head of APAC Investment Office at UBS Chief Investment Office, expressed the view that Hong Kong property prices could come off by as much as ten percent in 2016.

Overall UBS Wealth Management's Chief Investment Office predicts a world in transition in 2016.

Min Lan Tan, went on to say, "China’s economic transition means that a further slowdown in its annual growth rate to 5.5–6% by 2020 is not unthinkable. This should keep the commodity cycle in check, and signal that it may be time for investors to turn their attention to "new economy" sectors such as Asia internet and high growth services for 2016 and beyond. Looking into 2016, regional economic growth should continue to slow, mainly due to China. We overweight equities over credit, while currencies should remain under pressure against the dollar."

The UBS 2016 house view pointed out that signs of China's long-awaited economic transition may be finally underway – away from a reliance on fixed-asset investment toward domestic consumption. Asia ex-Japan economic growth should slow to a near 15-year low of 5.8%, dragged mainly by China, whose growth should grind lower to 6.2% from 6.9% in 2015. Thanks to low or negative core inflation, regional monetary and fiscal policies should remain accommodative.

The Swiss bank thinks significant yuan devaluation is a key tail risk, though it is unlikely. As the US Federal Reserve swings into action, UBS expects a moderate depreciation of the yuan against the dollar over 12 months, taking USDCNY to 6.80. Investors should also hedge against a potential 5% decline in APAC currencies versus the greenback over the next six months. The bank recommends being overweight equities over credit in the region.

In equities, UBS are overweight on China and Singapore, and underweight on Malaysia and Thailand. Globally, they also like Japan. In credit, Chinese high yield property is attractive for buy-and-hold investors.

Beyond 2016, long-term themes will continue to shape the investment landscape. A key example is worsening demographics in the US, Japan, Europe and China, which may constrain the outlook for financial assets in coming years and decades. Savings rates are likely to decline as the elderly draw on funds, reducing the glut of money that has buoyed markets. A smaller population of young workers could demand higher wages, igniting inflation and pushing up interest rates.

An aging population will also create opportunities in the healthcare sector. CIO sees earlier-stage cancer research as particularly attractive for long-term investment. Due to cancer's wider social implications, research in this area is particularly suited to impact investment, which aims to produce a defined social benefit as well as a financial return.

Mark Haefele, Global Chief Investment Officer at UBS Wealth Management and UBS Wealth Management Americas, said, "This world in transition will continue to challenge portfolio performance. Our experience shows that a well-defined investment strategy, regular portfolio reviews, and rigorous discipline in execution can help keep performance on track. We enter the year with the view that a modest acceleration in global growth will happen in 2016 and investors should be overweight equities."

The US economy should expand by 2.8% next year compared with 2.5% this year. The country must transition away from an era of zero interest rates, and from Barack Obama's presidency to that of his successor. Despite these uncertainties, the drag on US corporate earnings from a strong dollar and low energy prices should abate. Consumer spending should remain robust.

The Eurozone economy is likely to grow 1.8% next year compared to the current 1.5%. Growth in the UK should remain strong, repeating its 2.4% performance. Beset by a migration crisis, Europe faces questions about monetary stability, and the future of the likes of the UK in its political union. Nevertheless, improving growth and ultra-loose monetary policy should support profits in the Eurozone, where we remain overweight for equities.

Growth in emerging markets will remain subdued, but should improve to 4.3% compared with 4.1% this year. Emerging markets need to refocus on structural and political reform and less on investment, commodities, and cheap capital. They will be under pressure at a time of US interest rate hikes.

Stocks and high yield bonds should deliver positive total returns. Government bond prices are likely to fall while inflation, the oil price and US interest rates will all probably rise. Hedge funds are expected to deliver more favorable risk-adjusted returns in 2016 than in 2015, and for the asset class as a whole, returns of 4-6% are expected in 2016.