DBS Bank Advises Investing in Scarce Assets Amid Inflation Concerns

Feb 24, 2026

90 min

Feb 24, 2026 00:30

Inflation risks rising, investors told to buy scarce assets

## Rising Inflation Concerns

DBS Bank's Chief Investment Officer, Hou Wey Fook, has advised investors to focus on scarce assets like real estate, infrastructure, commodities, and precious metals due to increasing inflation risks. This recommendation comes as long-term inflation expectations in the US and Europe continue to rise from post-pandemic lows, with forecasts indicating sustained inflation through the decade.

## Structural Inflation Shift

Hou suggests that global inflation dynamics are undergoing a structural change, moving away from temporary factors like tariffs and supply disruptions. He notes that the long-term inflation equilibrium is trending higher than in the past two decades.

## Market Liquidity and Risks

Despite abundant liquidity, markets have not fully priced in the risks associated with rising government debt and fiscal deficits. Hou warns that ongoing loose fiscal policies could lead to higher credit spreads and weaker equity valuations.

## Importance of Real Assets

Real assets are becoming essential components of investment portfolios, rather than just defensive options. Hou emphasizes the benefits of diversification across various scarce assets to enhance portfolio resilience and preserve value in inflationary times.

## Equity Market Valuations

Global equity markets are benefiting from liquidity, but high valuations pose risks if conditions tighten. Hou recommends shifting focus to less crowded sectors like financials and healthcare for more stable demand and earnings resilience.

## Currency Stability in the UAE

For UAE investors, the dirham's peg to the US dollar reduces currency volatility, simplifying portfolio management. Hou sees no strong need for additional currency hedging in this context.

## Caution Against Holding Excessive Cash

Hou cautions against holding too much cash, as it risks losing purchasing power in an inflationary environment. He advocates for a balanced investment strategy that includes income-generating bonds, growth equities, and diversifying assets like gold to navigate the complex global investment landscape.

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