ABN AMRO Private Banking says it prefers to hold assets in China, South Korea,
Japan and Taiwan, attracted by their status as exporters
and due to their current account surpluses, while it frowns on countries
running deficits, such as Indonesia,
Thailand and India.

The Netherlands-headquartered bank, giving views on Asia and
global economies in its fourth-quarter investment outlook, went on to say that
it is holding to its “neutral” weighting on Singapore
because of the stability of the Singapore
dollar and strong current account surplus.

“The Singapore dollar should perform relatively well given
that the Singapore economy is well positioned to benefit from a pick-up in
global growth later this year and in 2014,” Roy Wellington Teo, senior foreign
exchange and precious metals strategist at ABN AMRO Group Economics, said in
the note.  

He continued that the Singapore dollar is also likely to outperform
against its South East Asian peers due to the country's healthier current
account balance and large foreign exchange reserves.

The Monetary Authority of Singapore is expected, ABN AMROsaid, to maintain its bias in favour of a strong currency, to mitigate
inflationary pressures in the city-state.

“The Chinese yuan (CNY) remains our top currency pick in
Asia given China's
strong economic fundamentals, current account surplus and large foreign
exchange reserves. Besides its undemanding valuation, the CNY also has the low
sensitivity to higher yields in the US and potential weakness in the
Japanese yen,” Teo said.

Globally, the bank sees “accelerating, self-sustained
economic growth” but does not see the US Federal Reserve moving to a tighter
monetary policy until early 2015.

“The most interesting aspect of the current situation is not
the potential impact of possible changes in US Federal Reserve policy, but the
underlying forces of accelerating, self-sustained global economic growth. We
have therefore reduced our cash position and further increased our exposure in
equities – particularly in the SME sector and in companies which are in the
engine room of this global economic recovery,” Didier Duret, chief investment officer
at ABN AMRO Private Banking, said in the note.

For the fourth quarter, the bank’s equity theme is small-
and medium-sized companies in the US
and in Europe which are involved in the industrial
supply chain or in optimising productivity levels.