Yong -- "Recommends fixed income investments but says there are also opportunities in Asian equities markets."
KUALA LUMPUR: Investors are advised to invest more in fixed income or bonds, compared to equities in the current economic situation.
Citibank Malaysia's Head of Investment Strategist and Research, Wealth Management Products, Steven Yong, said a defensive strategy with a larger portion of fixed income seems to be better for the cautious investor during the first half of this year.
"Fixed income is expected to do well in the first quarter," he added.
Yong said investors could focus on the emerging market debt as the economies of these countries were healthier.
While recommending fixed income for defensive investment, he said there were also opportunities in the equity markets in Asia.
"The equity markets in Asia are undervalued. This creates opportunities for investors but they have to be selective," he added.
He said the region is expected to record a Gross Domestic Product (GDP) of six per cent this year compared to less than two in the developed countries.
"The Asian economies are performing much better than those of the developed countries.
"Investors need to remember that regardless of the global and domestic economies, markets and political environments, they should remain conservative yet nimble in their asset allocation.
"Investors should remain invested but investment portfolios must be properly balanced to withstand volatility," he added.
Yong also said that gold would continue to have a positive outlook on the back of investment demand. He projects the gold price to average around US$1,950/oz in 2012.
He also sees a lot of growth in the local unit trust industry with local funds performing very well.
Meanwhile, he said, oil prices would likely be supported over US$100/bbl by several factors, including geopolitical risks and expectations of more liquidity tranches to come via monetary policy.
Interest rates, said Yong, will either remain flat or be lowered before year-end while inflation would be around 2.7 per cent for 2012.