Standard Chartered's market expert says there's no reason to be pessimistic
Stay positive on markets: Standard Chartered strategist
Standard Chartered strategist says global economy still has momentum
Despite the recent market volatility, Standard Chartered's chief strategist Steve Brice says he sees no reason to be negative on the overall market outlook. Brice believes that the global economy still has momentum and that the recent sell-off is a buying opportunity.
Brice acknowledges that there are some risks to the market, including the ongoing trade tensions between the US and China, the political uncertainty in Europe, and the rising interest rates in the US. However, he believes that these risks are outweighed by the positive factors, such as the strong global economic growth and the accommodative monetary policy in major economies.
Brice says the equity market correction was healthy and necessary, but does not believe we are near the end. He says a number of indicators point to the downside. Price-to-book ratios were at a 20-year high and bond yields were historically low. In addition, the market was pricing in the likelihood of a Trump tax cut, which now seems unlikely. So, valuations for both stocks and bonds look rich. Also, he says, economic data has shown signs of peaking. Purchasing Managers Indexes have been trending down and global trade volumes have contracted.
Brice says Standard Chartered is overweight on stocks in emerging markets and underweight on stocks in developed markets. He also says the bank is overweight on bonds in developed markets and underweight on bonds in emerging markets.
“We think the market is going to be range bound for a while,” Brice says. “We don't see a big upside, but we don't see a big downside either.”
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