These developments were duly acknowledged by Mr Thilan Wickramasinghe, Head of Research at Maybank Investment Banking Group, as he introduced a panel on investing during unprecedented times at Maybank Invest ASEAN 2023.

In this volatile climate, predicting the economic outlook is like taking a stab in the dark. As panellist Ms Anita Krishnamoorthy, CEO of investment advisory firm Brandes Investment Partners Asia, said, there is no singular way of characterising the current market cycle. The only thing that investors can be certain of is to stay nimble and diversified, no matter the investment climate.

That said, as the world comes off a decade of low interest rates, what opportunities and risks can investors generally expect? The panel outlined three key major trends that could shape the investment landscape over the next three to five years.

1. The “higher for longer” era

Some touted 2023 as the year which would see the end of interest rate hikes, especially with the easing of rate hikes in June and the Federal Reserve saying that it would keep its key interest rate steady at 5 per cent.

But tougher action is needed to quell inflation, and some economists are forecasting at least two more rate hikes by the end of the year, peaking at between 5.5 and 6 per cent.

In other words, investors must be prepared to see a “higher for longer” era, in which interest rates stay higher for a longer period than they would have hoped for. According to Mr Robin Yeoh, Regional Chief Investment Officer at Maybank Asset Management, the era of free money and near zero interest rates that characterised the last 15 years is now officially over.

For investors, this means a need to focus more on the fundamentals. For instance, they should pay closer attention when it comes to stock selection and invest in businesses that have pricing power and positive cash flows, as they can afford to raise prices and protect their margins even in a higher interest rate and inflationary environment. Diversification across asset classes and geographies will also be critical to achieving higher risk-adjusted returns.

Most importantly, rather than trying to time the market, one piece of advice that the panellists had is this: stay in it for the long term. The longer you stay invested, the higher the chances of getting good returns. As Ms Krishnamoorthy aptly put it, “If you have a long enough time frame, you can skip some of the noise along the way.”

2. Emerging investment opportunities in ASEAN

Another key trend that investors were keen to explore was the growth prospects of Southeast Asia. While the ASEAN-5 – Indonesia, Malaysia, the Philippines, Singapore and Thailand – experienced a slower growth of 4.3 per cent this year compared to 5.2 per cent last year, the region still presents exciting opportunities for investors.

For one thing, its digital economy is expected to grow 6 per cent annually and hit US$1 trillion by 2030. With 460 million tech-savvy digital consumers, the region is often among the most ardent adopters of new technologies such as blockchain and artificial intelligence.

The region’s push to grow its investment into sustainable energy also presents another significant opportunity for investors. Many countries in the region have put forth ambitious plans – including government-backed initiatives – to accelerate the transition towards clean energy. These include Singapore’s plan to increase its solar deployment to 1.5 gigawatt-peak (GWp) by 2025, Malaysia’s goal to have renewables account for 40 per cent of its power by 2035, and more. Yet, the region requires an additional US$1.5 trillion in investments if it is to meet its renewable energy targets.

While the region is a bright spot, it remains tethered to the growth prospects of its largest trading partner China. This means that the narrative surrounding China’s spluttering growth will inevitably impact how investors look at ASEAN, said Mr Alvin Chow, CEO and founder of investor education platform Dr Wealth. Investors should remain patient as it may take some time for the full potential of the region to be realised.

3. The AI investing wave

Unsurprisingly, AI is one of the biggest investment themes currently and is likely here to stay in the investment playbook. Investors are talking about the emergence of AI and many of them are ploughing into companies closely associated with the industry. Shares in Nvidia, a company that makes computer chips to train AI systems, have jumped by almost 250 per cent over just seven months. Expect the trend to persist, with many experts hailing AI as a transformative technology.

Yet, the use cases for AI are still in their early stages and there is a “degree of hype that is propelling this theme”, cautioned Mr Chow. This was echoed by Ms Krishnamoorthy, who added that investors should exercise caution in such an overvalued space by looking out for undervalued opportunities that are sufficient in offering them broad exposure to this theme.

Put simply, investors should not just try to punt on a singular theme or a small group of companies. Instead, they should look at maximising opportunities by diversifying across a range of companies even as one keeps the growth of AI in mind.