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Global synchronised recovery and positive earnings momentum do not change overnight
Chief Investment Office09 Feb 2018
  • Volatility could stay elevated in coming weeks.
  • Global synchronised recovery and positive earnings momentum do not change overnight.
  • Valuations are no longer expensive for the US market.
  • The current bout of weakness provides an attractive entry point for longer-term investors.
Photo credit: AFP Photo


The panic selling in global equities resumed after a brief reprieve on Tuesday (6 February). The S&P 500 index shed another 3.75% overnight (8 February), bringing its total losses to 8.5% since the correction started. While investors’ concern on rising rates was a commonly-cited reason for the correction, the unwinding of exchange-traded products (ETPs) that bet on volatility is another plausible factor accentuating the situation. Volatility could well stay at elevated levels in coming weeks, dragging markets lower.

But the positive macro backdrop of global synchronised recovery and positive earnings momentum do not change overnight. It is also premature to suggest that the current stock market weakness has impacted the economy in a negative way. We believe that rationality will eventually triumph panic for two reasons. Click here to download the PDF.

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