Author: CHUN MENG DE ANTON KWANG LUO BOMAI MANAGING DIRECTOR GLOBAL REAL ESTATE INVESTMENT PORTFOLIO MANAGER
Global equity markets have generally performed well this year, with some markets setting all-time highs. But the most volatile stocks are the large growth stocks that led the market last year — especially tech stocks. The volatility of these stocks is so dramatic because the prices of these companies are more susceptible to fluctuations in discount rates and are more likely to generate volatility when future trends are uncertain. On the other hand, large tech growth stocks are already components of many major indexes, and all at once impacting the index's decline.
Looking back at the bond market so far this year, unfortunately many fixed-income investors have been silently “hurt.” U.S. Treasury yields have climbed rapidly from a trough of less than 50 basis points in August 2020, recently breaching 175 basis points and setting a recent high, but historically low levels remain, and bond investors remain concerned about future downside risks.
AS COUNTRIES CONTINUE TO EMERGE FROM THE ECONOMIC CRISIS TRIGGERED BY THE CORONAVIRUS PANDEMIC, A GROWING NUMBER OF INVESTORS ARE LOOKING AT THE FUTURE OUTLOOK FOR THE US MARKET: EARNINGS WILL ONLY CLIMB SLIGHTLY THIS YEAR, AS INVESTORS ARE AWARE THAT A SIMULTANEOUS RISE IN INTEREST RATES AND GROWTH COULD THREATEN EQUITY AND BOND MARKETS AT THE SAME TIME., then entered a period of breaching slightly above the central bank's 2% long-term target. In fact, it is clear from the recent rise in the price of bonds, that...