Lim Say Boon, speaking earlier this week in Singapore about the bank’s views, cited several indicators for a healthier US economy, such as the appreciation in the dollar’s exchange rate and how the US current account’s position is improving. He expects US corporate earnings will also continue to move up.

“Say Boon”, as he is widely known, expects there will be a lot of volatility, noise even some fear as the rate rises become reality but the recovery in the US is broader and more robust making the US economy the strongest economy in the developed world.

Such views are, with some caveats, in line with some of the mass of forecasts sent to this publication by other private banks and wealth management houses at the start of the year. To see an example of an "outrageous" set of forecasts, see here.

Europe and Japan will continue to fight deflation pressures, he said, while China has began challenging disinflation. The CIO is certain that US rates will rise this year but only in tiny increments.

Lim Say Boon went on to say that now that the massive US programme of quantitative easing has been replaced by the equally substantial round of QE in Japan, he does expect the eurozone to adopt the same approach in due course as the region wrestles with sluggish growth six years after the 2008 financial crisis.

As far as the risk of Greece leaving the eurozone is concerned – Greece remains saddled with heavy debt and weak growth - Say Boon argues that the crisis in Greece will pass.

However, if by some political quirk Greece leaves the euro, there will be no concessions given to the country, he said, adding that he also expected to see severe punitive sanctions loaded onto the Greeks to warn other potential escapees such as Spain or Portugal should they become emboldened.  

Asset allocation

The DBS Group asset allocation recommendations for the next 6 to 12 months are:

-- Overweight US Equities for the next 12 months;

-- Neutral European equities for the first six months and overweight if the eurozone QE programme is substantial enough;

-- Overweight Japan; yen weakness will continue;

-- Underweight emerging markets ex-Asia;

-- Overweight emerging markets in Asia;

-- China/Greater China (current account surplus) offers attractive valuations.

-- Underweight bonds;

-- Underweight commodities for 12 months.