“It’s a good time to do the opposite from switching into cash because the level of anxiety is high, and so any improvement in the newsflow would have an outsized positive effect given the state of investor psychology,” Ken Adams, head of tactical asset allocation at Aberdeen Standard Investments, said by phone. “We’re not seeing indiscriminate selling in equities. These aren't panic-panic moves, like we saw during the financial crisis.”
The global stock market's fall accelerated this week, sending investors in search of shelter amid concerns about rising interest rates and the sustainability of tech-companies’ profits. Goldman Sachs Group Inc strategists said that it's time for equity traders to boost their cash positions to reduce their level of risk.
Still, the Federal Reserve is starting to consider a pause to its money tightening and end its cycle of rate hikes in the spring, MNI reports. European equities rebounded on Wednesday after tumbling to a two-year low in a sign that market players are seeing pockets of value after the sell-off.
Aberdeen bought US stocks in early November after taking profit at the end of September and is underweight in cash, credit and government bonds. And the $700 billion asset manager isn't the only one that continues to favour equities: UBS Wealth Management, DWS Group and JPMorgan Asset Management all say the stock fundamentals remain attractive and that the bull market isn't over just yet.
“We don’t think investors should exit the markets right now,” said Vincent Juvyns, a London-based global market strategist at JPMorgan Asset Management. “Equity fundamentals remains strong, valuations are in line or even below long-term averages and earnings growth should remain robust in 2019.”