Weekly Commentary - Strategy change after Fed’s surprise
Strategy’s focus should shift to Europe and Asia, after Federal Reserve unexpectedly delayed to reduce its bond-purchasing program.
Asian stocks had been oversold, and will return to normal price shortly. Over past few months, Asian equities price had dropped a lot partly because investors worried tapering will begin in September. Actually, Fed’s decision is likely to lead Asian equities spring. In fact, Philippines PSE Composite index, Thailand Set index and Indonesia JSX index rose by 5.32%, 3.57% and 3.76% respectively last week. Even though Asian emerging markets are still under the risk of QE tapering, tapering is not expected to begin soon, Asian asset is positive shortly.
In euro-zone, Angela Merkel won a resounding victory in Germany’s elections on Sunday. Although she will need a new coalition parent, political stabilization of Europe’s biggest economy is critical of European recovery. In addition, euro-zone market is less affected by Fed monetary policy, and less risky if Fed has any unexpectedly action.
Even though Fed’s decision boosts global equities, the market is risky. It is an uncertainty of next Fed’s action. We will keep monitor global market and adjust asset allocation if need.
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