Joanne Goh, Senior Investment Strategist, DBS Bank, says while geopolitical risk remains, investors should not consider a broad reduction in equity exposure. Instead, they may consider complementing equities with assets that have lower correlation, such as private equity, private credit, infrastructure, real assets such as gold, and certain hedge fund strategies, to help manage portfolio volatility. In an interview with Mint, Goh shared her views on the current market structure, the upcoming Budget, and the sectors she is closely observing.
What is your assessment of prevailing geopolitical risks? Should investors trim exposure to equities and buy more safe-haven assets?
Geopolitical risk remains present, reflecting ongoing policy uncertainty across major economies, including the US Shifts in trade, tariffs, industrial policy, and foreign relations can contribute to periods of market volatility and varied cross-border effects.
At the same time, such policy adjustments can create a range of outcomes, including selective opportunities in areas linked to domestic manufacturing, defense, energy security, and strategic supply chains, alongside challenges for more globally integrated sectors.
An environment where fiscal policy plays a larger role tends to support domestically oriented sectors, particularly when government spending, policy direction, and balance-sheet support contribute meaningfully to growth.
Through public capex, incentives, and targeted reforms, sectors with stronger domestic demand linkages and limited reliance on external trade may see relatively better earnings visibility.
In India’s case, this is supportive of infrastructure, capital goods, manufacturing, banks, and selected consumption and healthcare segments, where government spending can help crowd in private investment and support demand.
Against this backdrop, we do not see a strong case for a broad reduction in equity exposure, but rather for measured selectivity and diversification.
Investors may consider complementing equities with assets that have lower correlation, including alternatives such as private equity, private credit, infrastructure, real assets such as gold, and certain hedge fund strategies, to help manage portfolio volatility.
Safe-haven assets can serve a tactical purpose, while a diversified portfolio remains a balanced response to an evolving geopolitical environment.
In a risk-on environment, what signals do you rely on to identify quality investments and avoid areas where returns may be driven more by momentum than fundamentals?
In a risk-on environment, we focus on companies delivering strong revenue and earnings growth underpinned by long-term secular trends, while remaining disciplined in avoiding loss-making or speculative businesses.
In addition, balance-sheet strength and consistent cash flow generation are important, as they provide resilience should market sentiment reverse. That said, rather than relying solely on individual security selection, we believe a portfolio approach is essential.
In this context, we advocate our CIO Barbell Strategy, which allows investors to capture upside from long-term, irreversible growth trends and generate stable income.
On the growth side, invest in companies aligned with secular trends such as the aging global population and artificial intelligence adoption. On the income side, invest in high-quality bonds and dividend-yielding equities, including REITs.
These assets provide a regular stream of cash flow, helping to stabilize the portfolio and offering resilience during periods of market volatility. In addition, risk diversifiers such as gold provide investors with reduced portfolio volatility and drawdowns.
What sectors are you looking at for the next one to two years?
We continue to monitor India’s IT sector for selective or quality-led exposure. A more attractive entry point could emerge as global IT spending trends stabilize, AI monetization becomes clearer, and valuation expectations adjust to evolving growth assumptions.
In the near term, the sector is navigating a combination of cyclical factors linked to global IT spending patterns and structural changes associated with AI adoption.
Client preferences are gradually shifting toward productivity gains and outcome-based pricing, which may influence near-term revenue and margin dynamics. Over time, AI is likely to be incremental rather than disruptive for leading Indian IT services firms.
Larger players with established client relationships, strong balance sheets, and investments in cloud, data, cybersecurity, and AI platforms appear well-positioned to adapt business models toward greater productivity and platform-led offerings, potentially supporting margin stability over the medium term.
India’s banking sector remains a key component of the equity market and offers relatively strong structural characteristics. Banks are benefiting from an improved credit environment, with asset quality at healthy levels, manageable credit costs, and comfortable capital adequacy.
Balance sheets, particularly among large private-sector banks, are positioned to support loan growth across retail, MSMEs, infrastructure, and manufacturing, consistent with India’s investment-led growth trajectory.
Overall, Indian banks support a core allocation within an India equity strategy, offering a combination of structural growth, improving balance-sheet quality, and relatively lower sensitivity to global economic cycles, complementing exposure to infrastructure and manufacturing.
How should investors position their portfolio if the budget focuses on infrastructure and manufacturing?
India’s infrastructure and manufacturing sectors merit continued attention, particularly in the prevailing global economic and policy context.
From a structural perspective, India is one of several beneficiaries of ongoing global supply-chain diversification.
Government-led initiatives such as Make in India, production-linked incentives (PLIs), and sustained public capex are supporting capacity build-out across roads, rail, ports, power, defence, and digital infrastructure.
This provides a multi-year growth opportunity for infrastructure developers, capital goods, cement, and engineering players, supported by domestic demand and moderate exposure to global trade cycles.
Manufacturing is also seeing steady progress as India gradually moves up the value chain, from basic assembly to electronics, autos, renewables, and defense manufacturing.
Rising FDI, incremental improvements in ease of doing business, and a large domestic market support scale and margin expansion over time.
These sectors are generally aligned with longer-term global supply-chain and strategic realignment trends and tend to have relatively lower sensitivity to short-term developed-market growth fluctuations.
AI continues to dominate investment narratives. How can investors participate in this theme while remaining mindful of concentration and valuation risks?
One way investors can participate in the AI ​​theme without becoming overly concentrated is to look beyond the technology sector.
AI’s impact is far-reaching and extends well outside the technology space, reshaping business models across the broader economy. In our view, a better risk-adjusted way to gain exposure to this AI wave is to look for “adapters” that embrace AI to drive efficiency gains and higher profitability.
On this basis, we believe large-cap companies are better positioned to scale AI adoption. These companies typically have more capital and data advantage to deploy AI at scale.
Hence, this will translate into a widening AI-related productivity divergence between large and small businesses.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
