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[SINGAPORE] Amid the tariff-induced volatility globally, markets have swung wildly in recent days.

Both US and global markets plummeted to lows early this week, before rebounding slightly and falling back again on the kicking in of reciprocal Trump tariffs.

In a huge burst of buying, markets soared again on Thursday (Apr 10) as US President Donald Trump took a pause on tariffs for 90 days and temporarily lowered reciprocal tariffs. He, however, did not give any reprieve to tariffs on China goods – raising them to 125 per cent from 104 per cent.

With much uncertainty on the horizon, where can investors put their money?

“With the tit-for-tat retaliatory measures taking place globally, the situation could deteriorate further before it recovers. This means that markets are likely to remain volatile,” said OCBC in a Thursday note.

“Market volatility is likely to remain elevated in the weeks ahead as investors assess rapidly shifting tariff developments and consider the potential implications for growth, inflation, central bank policy and financial markets,” said UBS on Thursday.

Many have already rushed into safer, lower-risk options such as fixed income offerings – bonds and money market funds. But take caution as not all corners of the fixed income market can be bought into. Some bonds were not spared, with prices of longer-dated 10-year Treasurys plummeting and yields soaring on Wednesday.

Global money market funds witnessed inflows of US$61.3 billion as at Monday, after a net US$39.6 billion worth of purchases in the previous week, based on data from LSEG Lipper.

On the other hand, global equity funds tumbled to a four-week low, garnering slightly below US$3 billion worth of inflows during the week.

In particular, US equity funds are quickly losing their shine, having witnessed around US$9.54 billion in net outflows during the week of Apr 7.

For some investors in Asia, the direction towards fixed income began prior to Q1 this year, considering how fixed income funds were the dominant category in 2024 in terms of fund flows in Singapore, said Arvind Subramanian, senior analyst for manager research at Morningstar.

“The beginning of rate cuts by global central banks, combined with reasonably attractive yields, helped drive inflows into this segment,” he told The Business Times.

Subramanian added that global bond funds – typically holding a larger allocation to investment-grade US bonds – stood out in particular as the most prominent sub-category within fixed income.

Chong Jiun Yeh, group chief investment officer at UOB Asset Management, said their short-duration investment-grade bond funds, including those focused primarily on Asian investment-grade credits and sovereigns, have continued to see steady and positive net inflows.

“While credit spreads have widened across the world, this has been offset by falling yields amid investors’ flight to safety,” he said.

Bonds to buy or avoid

Corporate and government bonds are “safe-haven assets” which investors are now turning to amid a volatile market, said Jason Kuan, director of investment research and advisory, chief investment office at CIMB Singapore.

“The bonds attracting the most interest are those with good credit ratings or issued by countries with strong balance sheets,” he said.

In a Monday note, Johanna Kyrklund, group chief investment officer at Schroders, also wrote that she sees “value in government bonds as a hedge against the risk of recession for the first time in this cycle”.

“Trump’s opening salvo points to higher tariffs than we were expecting, and our economic growth forecasts are being adjusted downwards. This leads us to reduce our equity exposure, (too).”

However, Chris Kushlis, chief emerging markets macro strategist at T Rowe Price, finds that in certain areas, the impact on specific corporates will be “varied”.

“We see the direct impact on US dollar bond issuers to be selective rather than broad, within the Asia corporate sector,” he said. “For instance, some issuers in the hardware technology, semiconductor and automotive supply chain industries will have significant exposure to the US via direct exports and/or ultimate end-user demand.”

On the other hand, issuers in financials, utilities and infrastructure sectors are expected to remain insulated, he said.

Safe-haven plays in Singapore

Some analysts have found value in certain Asian equities and sectors.

Analysts from DBS issued a “buy” call on Singapore real estate investment trusts (S-Reits) in their Monday note.

“Back in 2018, while we noted an initial weakness in share prices, S-Reits rebounded strongly by 20 per cent till 2020 on the back of gradual rate cuts,” they wrote. “Looking ahead in 2025, we see increased allocations as ‘safe-haven plays’.”

Top picks by the analysts – CapitaLand Integrated Commercial Trust, Mapletree Industrial Trust, Keppel Reit, Mapletree Logistics Trust and Parkway Life Reit – have been maintained.

Paul Yap, head of equity research at Malaysia’s AmInvestment Bank, said in a Monday report: “In the event of excessive sell-downs, we also like ViTrox and Malaysian Pacific Industries (MPI) as structural picks.”

The analyst issued “buy” ratings on both technology stocks, and target prices of RM4.40 and RM27.80 for ViTrox and MPI, respectively.

“On the other hand, sectors such as finance, non-durable consumer goods and manufacturing are most affected as investors assess the potential impact of the US tariffs on these companies and their business partners,” said CIMB’s Kuan.

Chinese stocks

An increase in investor interest in China equities during Q1 2025 was witnessed clearly, said Claire Liang, strategist, manager research at Morningstar, where the asset class “saw a strong rally” in February.

This is reiterated by Charu Chanana, chief investment strategist at Saxo Markets Singapore, who noted that after a prolonged slump, Chinese equities – particularly tech and consumer stocks – have started to attract renewed interest, driven by cheap valuations, government stimulus and excitement around artificial intelligence innovation.

“The Chinese government’s fiscal deficit ratio is at its highest level in over 30 years, and a 4.4 trillion yuan (S$802.3 billion) local government bond issuance underscores Beijing’s commitment to economic recovery,” she wrote in an Apr 3 note.

The iShares China Large Cap Ucits Exchange-Traded Fund is an example where many of its constituents are still trading at discounts, said Chanana, for those who are interested in a contrarian exposure to Chinese blue chips.

Chinese stocks rebounded this week, after the central bank promised loans to help stabilise the market and state-linked funds scooped up assets.

US markets

As for those adamant about staying in US markets, some defensive sectors offer “relative safety”, wrote Chanana.

“Healthcare has structural tailwinds from an ageing population, though policy risks remain,” she said. “Utilities usually perform well with lower bond yields and may need additional Fed rate cuts to sustain gains.”

Consumer staples, however, while a traditional safe-haven sector, faces headwinds from a negative Q1 earnings expectations and an elevated forward price-to-earnings multiple, she added.

Most equity investors, however, given the high level of uncertainty around the potential of lower earnings, a US or global recession and higher inflation, are taking a more cautious stance now.

“While we have received inquiries about buying on dips, our house view is underweight on equities, especially US equities, and to increase cash and bond allocations until there is greater clarity on earnings and economic growth prospects,” UOB’s Chong said.

“Additionally, tilting portfolios towards quality, high dividend, and interest-rate sensitive stocks can help limit impact from market volatility.”