DBS Vickers Securities advises investors to increase their holdings in gold and reduce their allocations to government bonds from developed countries, predicting that the price of gold will reach US$3,765 per ounce by the end of this year.
Wey Fook Hou, Chief Investment Officer at DBS Bank, commented that the first 100 days of US President Donald Trump’s second term caused significant disruptions in global markets, primarily due to escalations in a worldwide tariff war.
While these measures appear aimed at repositioning US geopolitics, ongoing policy uncertainties are heightening the risk premiums on American financial assets. Moreover, recent comprehensive tax reforms have amplified concerns over the US’s long-term fiscal stability.
The Congressional Budget Office projects the US federal budget deficit will hit $1.9 trillion this year, with national debt rising to 118% of GDP by 2035. Additionally, Moody’s downgraded US sovereign credit to Aa1, and 30-year bond yields now exceed 5%, reflecting increased investor anxiety over the sustainability of US fiscal policies.
Trump’s “beautiful tariff war” has two main objectives: first, to strategically counter China’s influence, and second, to generate revenue to address the country’s growing insolvency.
However, Wey noted that even with an aggressive 20% universal import tariff, the net revenue—accounting for economic effects—would only be around $185.2 billion, insufficient to cover federal interest payments.
These fiscal limitations have prompted DBS to adjust its investment approach. The firm maintains a neutral stance on equities overall, anticipating varied performance across regions and sectors. Confidence in US technology stocks remains high, with a preference for service-oriented over goods-based sectors.
Meanwhile, DBS recommends raising exposure to European and Asia ex-Japan equities, citing reasons such as fiscal stimulus, attractive dividend yields, and valuation discounts relative to developed markets.
In fixed income, government bonds from developed markets are now rated as neutral amid ongoing inflation and fiscal pressures. DBS favors high-quality credit with ratings of A or BBB and employs a “duration barbell” strategy, targeting bonds with maturities of 2–3 years and 7–10 years, as well as capital securities and short-duration high-quality debt.
The bank is particularly bullish on alternative assets, especially gold, with a price target of $3,765 an ounce by the end of 2023. It also recommends income-generating private equity, including infrastructure investments, as a resilient source of returns amidst market volatility.
Wey added that as fiscal risks become more apparent, investors are likely to shift away from US and Japanese assets, with capital diversifying into Asian local currency bonds, which are emerging as beneficiaries. The US dollar is expected to weaken further due to inconsistent and controversial policies under the Trump administration. As a result, alternative safe-haven currencies could gain popularity.
Chanpen Sirithanarattanakul, Head of Research at DBS Vickers Securities Thailand, predicts Thailand’s GDP growth will be around 1.8% in 2026 if US tariffs hover between 18% and 20%, with the Stock Exchange of Thailand (SET) index estimated at around 1,300 points. However, if tariffs remain high at 36%, growth could slow to just 1%, prompting adjustments to her SET index forecast.
Despite macroeconomic challenges, certain Thai sectors such as healthcare and telecommunications remain attractive. The Thai baht is anticipated to appreciate slightly, reaching 32.8 against the dollar this year, and 32 in 2026.
Finally, the brokerage expects Thai interest rates to be lowered once or twice within this year, with further cuts likely in 2026. Ms. Chanpen highlighted that domestic political developments, especially in August and September, along with US tariff policies, will significantly influence investment sentiment.