The selloff Friday in Asian equities might be seen as a buying opportunity by some, but according to Mark Matthews, Head of Asia Research at Julius Baer, at a time like this there is no place to hide for equity investors.
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“Stocks are risk assets and there are no markets that are uncorrelated,” Matthews told CNBC.com.
Across Asia markets plunged on Friday after U.S. stocks experienced their worst sell-off in two years. Big losses were seen in markets in Hong Kong, Japan and South Korea, which were all down around 4 percent.
However, Matthews said frontier markets like Bangladesh and Sri Lanka, with low levels of foreign investments were somewhat insulated. “If you are in a panic to sell you won’t bother selling Bangladesh since it is small and not so liquid."
Malaysia is another market that Matthews believes is relatively safe from global volatility because of capital controls on foreign investors and he said the market enjoyed huge local institutional support.
Matthews recommends investors should be underweight equities and overweight cash and bonds, which he said was the best place to hide.
“I like yuan offshore bonds and local currency Thai, Malaysian and Indonesian bonds which offer good yields and currency upsides.”
He advised selling gold, which he warned was “over owned” but could be looked at once it fell to $1,500 per ounce.