DBS suggests hedging the US dollar as Asian currencies are undervalued | Lianhe Zaobao

DBS Bank advises investors that if their dollar holdings are too high, they should consider hedging, as Asian currencies are generally undervalued and borrowing costs are relatively low. The new president of DBS Group, Trudy Dai, pointed this out during her opening remarks at the DBS Private Bank's market outlook event for the first half of 2026 on Monday evening (January 12). She stated, "For Asian investors who allocate both dollar and local currency assets, if the dollar holdings are too high, they should consider hedging, especially when the dollar is not the local currency, as this approach is usually more prudent." She noted that the dollar remains significant and is still the preferred currency for many investors. However, China is actively promoting the internationalization of the renminbi, and Asian currencies are still relatively undervalued overall. Moreover, the financing costs of Asian currencies are at low levels. For example, the one-month Singapore Overnight Rate Average (SORA) is between approximately 1% and 1.3%. Whether it is the yen, renminbi, or Singapore dollar, borrowing costs are relatively low, so investors can pay attention to the positive interest rate opportunities offered by some Asian currencies. Further Reading Financial Tips: Should You Hedge Against a Weak Dollar? Analysts: Strengthening Ringgit and Renminbi, Yen and Won Fluctuate This Year, Outlook for Next Year is Positive Additionally, Trudy Dai pointed out that as knowledge and intelligence become "commoditized" and "democratized," future productivity will depend on the recombination of labor, technology, machines, and capital. She believes that with the expansion of the gig economy, younger generations becoming more actively involved in investing, and the increasing role of algorithms in the market, the role of capital in generating returns will further expand, but it may also increase market volatility. Regarding concentration risk, Trudy Dai noted that the U.S. stock market currently accounts for about two-thirds of global market capitalization, while the "Big Seven" tech companies account for about one-third of U.S. market capitalization, indicating a high level of market concentration that warrants caution. She believes that although large tech stocks can still benefit from liquidity, the Asian market has a relative advantage in the medium to long term in terms of valuation and diversification She also pointed out that investors' demand for private assets is rising to diversify risks and reduce short-term volatility. Private assets are not valued at market prices on a daily basis, which does not mean they lack volatility. At the same time, the liquidity of these assets is relatively low. However, since there is no need to endure daily fluctuations reflected in prices, investors can avoid the pressure brought by daily market volatility in the short term. From the supply side, many companies, especially medium-sized, high-growth companies, do not necessarily wish to go public. In the United States, many companies valued at around $100 million have no intention of going public, and some companies prefer to remain private for the long term. Therefore, to access these potentially promising startups or small to medium-sized growth companies, sometimes it can only be achieved through the private market