Of all the adjectives to describe 2020, “normal” is probably the last word that comes to mind. COVID-19 has disrupted the world as we know it in an unprecedented way. Economic activities came to a standstill as a result of nationwide lockdowns and a halt in international travel to contain the spread of the coronavirus. Commodity markets were besieged with a slump in demand, with oil prices briefly crashing into negative territory for the first time ever also as a result of the price war between Saudi Arabia and Russia. The pandemic ushered in significant market volatility and uncertainty, which pushed the “fear gauge” or VIX index beyond levels seen during the 2008/09 global financial crisis.
To restore financial market stability, the U.S. Federal Reserve and other central banks aggressively eased monetary policies, while governments worldwide introduced emergency fiscal stimuli to help cushion the economic fallout. These measures provided the much-needed liquidity and confidence, which led to a swift rebound in risk assets including equities. Safe-haven assets such as the U.S. Treasuries and gold remained solid throughout the year, with gold prices breaching the USD 2,000/ounce at one point.
Looking ahead, we are optimistic that global growth will rebound in 2021 as economic activities gradually normalise. While joblessness has crept up, the inherently high savings in many households allow consumers to continue to spend which will in turn help many businesses recover. Furthermore, governments are placing more emphasis on fiscal stimuli which should support the recovery. However, sectors that are dependent on international tourism and air travel may take longer to recover as a cautious approach in reopening borders is still the logical thing to do by governments. Notwithstanding the immediate reactions to the pandemic, one cannot ignore the structural shifts that will likely lead to a new normal, and these include the accelerated move towards digital consumption and cloud computing. The growing focus on sustainable development has also led to new investment opportunities across different asset classes.
At Maybank, our emphasis in adopting a balanced approach to build a well-diversified investment portfolio has worked well, especially in times of uncertainties. As economies emerge from the recession, we will continue to seek growth opportunities through selected equity markets and sectors. There remains a need to maintain exposure in fixed income and alternative investments, which will help manage the downside risks and add to the resilience of one’s portfolio performance.
We look forward to sharing our investment insights and would like to take this opportunity to thank you for your continued support.
On behalf of everyone here at Maybank Group Wealth Management, we wish you a healthy and prosperous 2021!
Alvin Lee
Head, Group Wealth Management & Community Financial Services, Singapore