Recent “tit-for-tat” actions appeared to be a sharp turn in the approach to trade resolutions by US and China, but was soon confounded by messages that negotiations could be back on the table.
The substantial rally in fixed income has improved the relative value of equity dividends. A modest correction of 10-15% in global equities from their peak could potentially be an opportunity to increase allocations, particularly in dividend yielding equities.
After a strong rebound in investment markets during the first half of 2019, market volatility may be amplified by global trade risks as Citi analysts believe equity markets have yet to fully price in all possible outcomes from trade tensions.
Staying Disciplined with Portfolio Rebalancing and Asset Allocation
By Celestee Tan
As investors drove a relief rally in financial markets post the G20 summit, this serves as a reminder that market timing could be detrimental to the long-term health of portfolios. Citi analysts believe that asset allocation across high/low risk investments remains the best strategy to cope with uncertainty.
The Citi Private Bank Global Investment Committee (GIC) has reduced our risk asset allocations, where the global equity allocation is now underweight, fixed income overweight and cash overweight.
Global equity markets have come nearly full circle from a significant correction in 4Q 2018. Despite the recent rally, Citi analysts still forecast mild gains for the rest of 2019 albeit with higher volatility.
