Jakarta, CNBC Indonesia – A number of fund management companies (fund) Global continues to recommend steady stock allocations at nearly four-year highs in portfolio models this month, according to survey Reuters most of which was done before the shocks related to the latest Covid-19 strain in the stock market.
Opinion poll Reuters on 15-30 November 2021 against 35 fund managers and investment heads in Europe, the United States (US) and Japan showed, there was no change in the recommended stock or equity exposure, which was an average of 50.3%, the highest since late 2017. Meanwhile, bond exposure (bond) also stable at 39.0%.
Last weekend, Friday (26/11)) traders and investors made a massive sell-off (sell-off) shares on the US stock exchange aka Wall Street following the detection of the novel coronavirus and possibly vaccine-resistant variant, Omicron, marking the worst week for global stocks since early October.
On Monday (29/11) this week, the stock market of Uncle Sam’s country actually succeeded rebound sharp as investors look for ‘cheap goods’ aka take action buy the dip (buy when prices are low) after a massive sell-off.
However, Wall Street slumped again on Tuesday (30/11) as the chairman of the US central bank aka The Fed Jerome Powell signaled that the central bank would consider speeding up the withdrawal of its bond-buying program. tapering off at the December meeting amid the current spike in inflation.
Meanwhile, on Wednesday (1/12) Wall Street again slumped into the red zone at the close of trading on Wednesday (1/12/2021) local time. In fact, for most of the session, Wall Street had moved in the green zone.
The collapse of Wall Street’s three main benchmark exchanges came after the US Centers for Disease Control and Prevention (CDC) confirmed the first case of the Omicron Covid-19 variant in the US. Meanwhile, the market is still digesting comments from the chairman of the US central bank or the Fed regarding inflation.
“This Covid-19 risk has been taken into account, but will still be a major risk to the market…it must be emphasized that it is too early to say whether the Omicron variant will cause [pengurangan efektivitas] vaccines,” Craig Hoyda, senior quantitative analyst at abrdn, told Reuters.
Hoyda added, although reducing the share of shares at this time might be a reasonable choice, he did not approve of total investment portfolio rotation.
“While there are strong arguments for reducing risk — a moderate reduction for equity positions — it’s not advisable to react to the extreme by completely rotating the portfolio,” Hoyda continued.
In comparison, benchmark US stock indexes, such as the S&P 500 and Dow Jones, are up 21.95% and 12.57% respectively this year, while the UK and European stock indexes, the FTSE and Stoxx 600 are up about 9.08% and 17.22%.
The Omicron variant comes as investors focus on how quickly major central banks such as the Fed — which began reducing its support for the economy this month — will start raising interest rates to curb inflation that has soared recently.
“There is a sense of self -satisfaction in the market and the actions of the central bank that also frighten us. The central bank keeps repeating the ‘temporary’ narrative. (transitory), in a kind of inflation risk neglect,” said Matteo Germano, global head of multi-assets at Amundi.
“Inflation is now everywhere: before, it only happened in the US and now it’s spreading across developed and emerging markets, with the main exception of China,” Matteo added.
Then, asked about the more likely performance prospects of companies in their local stock market, the respondents were almost evenly divided. Eleven out of 21 respondents said the company’s report card will improve, while the rest said it would worsen.
“We remain positive on the company’s earnings outlook for 2022. However, the recent rise in inflation, supply chain bottlenecks and pullback in GDP [produk domestik bruto] global issue is a short-term issue,” said Peter Lowman, chief investment officer at Quorum of Investments.
Peter continued, consumer spending will help support the economy in the fourth quarter of this year “and the global economy will pick up through 2022 along with some corporate earnings surprises.”
CNBC INDONESIA RESEARCH TEAM
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