Dylan Cheang, DBS Private Bank
The latest selldown is no different from the one in 1Q18– where investors over-reacted to the Fed’s tightening concerns, before calm and rationality took over.
Beyond the current bout of volatility, we expect fundamentals, especially macro and corporate earnings growth, to return and stabilise the markets, in particular, the US market.
The sharp selloff in US risk assets would likely weigh on yields in the
coming months. DBS forecasts the UST 10-year yield to stay near the level of 3.2% for 4Q18, and we do not anticipate drastic swings in coming weeks.
We have highlighted our preference for China financials and technology stocks. The latest selldown in China equities presents attractive opportunities for investors to buy into these investment themes.