Loding Loading ...
Trading in financial markets involves significant risk of loss which can exceed deposits and may not be suitable for all investors.
Before trading, please ensure that you fully understand the risks involved
Trading in financial markets involves significant risk of loss which can exceed deposits and may not be suitable for all investors. Before trading, please ensure that you fully understand the risks involved

Wednesday, November 02, 2022

Global markets are down. Here is where to invest?

By Century Financial in Blog

Global markets are down. Here is where to invest?
Global markets are down. Here is where to invest

The market throws a tantrum.

For the large part of 2022, investors have been witnessing red. But last week proved to be extraordinarily bad. The Consumer Price Index rose by 0.1% from July, indicating that inflation was still rising, despite the US Fed raising interest rates. The news had a shattering impact on the stock market, losing $1 trillion, its worst one-day loss since June 2020.

In fact, if we are to believe the news, then expect hikes up to 4.25%-4.5% by the end of this year to combat inflation, higher than what was projected in June (3.25%-3.5%). What this means for the average consumer is higher interest rates and rising borrowing costs for other loan products, like real estate, vehicles and even credit cards. As things stand, mortgage rates have touched beyond 6%.

And it is just not the US that has raised hikes. Norway, Switzerland, UAE, Philippines, etc., have also increased their rates. The US dollar growing stronger has only weakened the currencies of BRIC (Brazil, Russia, India and China) nations. The Indian Rupee hit a record low of Rs 81.93 against the US dollar, and so did the Chinese Yuan, which hit its lowest since 2008’s recession. And, of course, the Russia-Ukraine conflict rages on, leaving most European nations in short supply of natural gas.

So at times like this, how should you as an investor behave – buy more stocks and earn big or pull everything out and avoid more losses?

The simple truth is that the tightening financial conditions could be in the news throughout the year. However, there remains good news coming from corporate earnings and, again, likely to dominate the news cycle. So for investors that are seeing red and looking to sell, price action trading are the best capture the opportunities in the market.

Areas of Opportunity

Despite a tumultuous 2022, the market can still offer opportunities to invest. Here are some to keep an eye on.

US Value Stocks: There are two reasons to remain confident in value stocks. The first, during recessions, they tend to be very cheap and reach their normal levels after recessions. The second is for firms like Morgan Stanley that see the economy moving to a period of permanent higher inflation. In this scenario, inflation-sensitive stocks are likely to outperform.

Europe: Regularly, you are likely to hear strategists asking you to favor European stocks over the US. Simply put, European stocks are cheaper, and on a value bias, they scale higher. And frankly, there are opportunities in some European stocks this year. But, don’t just buy them because they are cheaper; look at their performance and then take a call.

Asia ex-Japan: It’s a region worth looking at. Simply on growth, the region has seen companies doing as well as US companies. Though the region lagged in 2021, it is still a solid alternative for investors to invest in.

Growth/Technology Stocks: Many analysts rightly saw the chase for growth/technology stocks after the COVID-19 lows as a bubble. However, the more established technology stocks never traded to the same frenzied level. Stocks here have underperformed despite impressive earnings, which give investors an immense opportunity to capitalize and invest in large-cap technology stocks that are trading at reasonable levels.

Most central banks are likely to stay focused on combating inflation in the coming weeks, with many investors feeling that the market is likely to be down. This has led to uncertainty in the market, with some analysts and economists predicting an economic crisis could be on the way. However, if you look closely and do your research, there are opportunities to find and make a hefty profit. Remember, in every problem, there is an opportunity.

Disclaimer: Century Financial Consultancy LLC (“CFC”) is Limited Liability Company incorporated under the Laws of UAE and is duly licensed and regulated by the Emirates Securities and Commodities Authority of UAE (SCA). This document is a marketing material and is for informational purposes only and must not be construed to be an advice to invest or otherwise in any investment or financial product. CFC does not guarantee as to adequacy, accuracy, completeness or reliability of any information or data contained herein and under no circumstances whatsoever none of such information or data be construed as an advice or trading strategy or recommendation to deal (Buy/Sell) in any investment or financial product. CFC is not responsible or liable for any result, gain or loss, based on this information, in whole or in part. Please carefully read full disclosure mentioned on the website.