SINGAPORE (June 25): Diversify your investments; Don’t time the markets; and look at opportunities in Emerging Markets, says Citi Private Bank in its mid-year outlook report.
Although global economic growth appears firm for the time being, the trade war between China and the United States as well as the Iran oil export sanctions have cast a pall of uncertainty over the investment horizon.
According to Citi, EPS growth of global stocks is likely to slow from 16% to 5%, while EPS growth of US stocks should slow from 23% to 4% due to its high dependence on trade.
Developed economies are also unlikely to restore their interest rates to historically “normal” levels due to their inability to do so without suffering recession.
With such a backdrop, Citi strategists suggest investors remain risk-off and adopt several time-proven investment strategies.
“Unlike investing in only one region, you end up offsetting risks by diversifying – especially since global equities may outperform regional ones during a crisis,” says Steven Wieting, Chief Investment Strategist and Chief Economist at Citi.
“And no decade has had the same best single asset for the two consecutive years,” adds Wieting.
Meanwhile, Ken Peng, head of Asia investment strategy at Citi, says investors should avoid trying to time the market.
“Markets have very big down days and if people sell during those times, this can compound the problem. We have to allocate a level of risk to the market, but only a tolerable one,” says Peng.
Some widely under-invested long-term opportunities include Asian development, digitisation and the healthcare industry.