Equity exposure remains stable, US interest rates and Omicron pose risk: Global Fund Manager


US, European, and Japanese fund managers recommend stabilizing equity exposure rates in model portfolios, according to a Reuters study conducted before the discovery of the latest COVID-19 variant shook the market. I am.

A November 15-30 poll of 35 fund managers and chief investment officers suggested that the 50.3% exposure to equities remained unchanged. This is close to the highest level reached in the last four years. Bonds remained unchanged at 39%.

Japan’s Nikkei Stock Average is expected to rise 11.4% by June next year, reaching 31,000 from Tuesday’s closing price of 27,821.76, based on median poll estimates. However, Omicron-related restrictions and US rate hikes can pose a risk to profits.

SMBC Nikko Securities expects Nikko to fall by about 1,500 points if the Fed raises the federal funds rate, which affects the market. Due to uncertainties in interest rates, the Japanese market has not responded, although it performed well in the third quarter.

“The actions of the market and the central bank have the most scaring complacency for us. The central bank continues to repeat temporary explanations, as if it downplays inflation risk,” Amundi’s Multi. Matteo Germano, Global Head of Assets, told Reuters.

While Japanese stocks are believed to be undervalued, European stocks have hit record highs with a strong recovery of companies.

Germany’s DAX and France’s CAC 40 indexes are projected to hit record highs by June 2022, according to Reuters poll analysts. The DAX is expected to rise 8%, the CAC 40 to rise 6%, and the Pan-Europe STOXX 600 to rise at least 7%, reaching 500 points by July.

Stocks around the world fell on Friday with the announcement of Omicron, but stocks almost rebounded. Airline inventories were hit when flights from southern Africa, where the latest variants were discovered, were banned.

Omicron appears to be highly contagious based on the first findings, but South African scientists have reported that the atypia results in mild symptoms. Investigations are currently underway, but a more definitive explanation may take some time. Uncertainty has hit high-risk assets such as digital currencies and stocks.

“These COVID-19 risks have been reduced, but they will still be a major risk to the market … stressing that it is too early to determine if the Omicron variant will lead to vaccine avoidance. Must be, “Aberdeen Investment Company told Reuters.

Naveen Athrappully