SINGAPORE (July 3): Covid-19 has upended human behaviour as we know it. Because of lockdowns and circuit breakers, economic growth has taken a hit. To revive, in particular, the US economy, the US Federal Reserve is committed to unlimited quantitative easing, with other central banks such as the European Central Bank and Bank of Japan taking similar steps. With the exception of China, governments in developed and emerging economies have unleashed trillions of dollars in stimulus spending. In Singapore, the government announced four budgets comprising $93 billion to support households and jobs.

The result of “QE to infinity” and the various government stimulus measures have caused interest rates to plunge, equities to rise and leaving investors looking for better returns and higher yields. While local homeowners with mortgages have cheered their lower mortgage rates, low interest rates have other far reaching impacts. Savings rates have fallen, finding yield is a challenge, and banks — which in Singapore are the bedrock of several widely followed market indices — are likely to experience margin pressure.

“The post-Covid world looks different from the pre-Covid world. Investors need to reassess how they think about allocation. Yields have moved even lower and developed markets are likely to return very low or negative returns,” says Ben Powell, chief investment strategist, Asia Pacific, BlackRock Investment Institution, during a webinar on June 30.

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