Market opportunities are arising with an improved growth outlook but «many clients are still sitting on cash», Deutsche Bank Private Bank’s APAC chief investment officer Stefanie Holtze-Jen told finews.asia in a recent conversation.
One of the biggest adjustments in the investment strategy of Deutsche Bank’s wealth management unit is within equities, where it lifted targets for all major stock indices, reflecting an upgrade in its macroeconomic growth forecasts for the US and China. According to Deutsche Bank Private Bank’s APAC chief investment officer (CIO) Stefanie Holtze-Jen, clients were also interested in market participation but «only after a correction».
«As we know, when everyone is looking for a correction, it will often not occur,» Holtze-Jen said in an interview with finews.asia. «Unfortunately, many clients are still sitting on cash and the re-pricing on rates hasn’t helped draw them away. There is no disagreement on rate cuts but they are still willing to wait, given recent US economic data points. The allocation to deposits base is still too high compared to the market opportunity.»
Asia Outlook
Within Asia, the German private bank is most positive on Japan for outperformance with consumer discretionary, financials and IT/semiconductors as its preferred sectors. It also finds India compelling and Southeast Asia attractive due to supply chain changes in the region. On China, Holtze-Jen noted that the bank made a tactical entry in February before closing the trade in late March when the local central bank set the currency fixing at a weaker rate.
«I think the government has been doing a really good job in stabilizing equity sentiments,» she explained. «From my perspective, we’ve had such a long time of peak negative sentiment around China. My fear is when it takes off, it takes off.»
Fixed Income
On fixed income, Holtze-Jen said that clients in Asia were seeking a coupon of 4.5 percent from their investments.
«We are still looking at investment grade as a higher quality play. But once the rate cut cycle starts, investors can also start looking at emerging market bonds,» she added.
Geopolitical Sentiments
During a recent CIO roadshow, Deutsche Bank polled clients on two questions about the US elections. The first question is about the victor and they «unsurprisingly» selected Donald Trump, according to Holtze-Jen. The second question was about whether they saw geopolitical risks as manageable, concerning or non-existent, given the previous expectation.
«Most clients see geopolitics as manageable. And I think that’s a show of hands for how Asia is positioned,» Holtze-Jen observed. «Even during my recent visit to Hong Kong, investors have been signaling that they know what’s coming their way, including EV restrictions in Europe.»
