“We have been advising our clients to take advantage of any short-term rebounds to offload their portfolio in risky assets, including lower-rated and higher-risk credit and equity, in order to reduce the portfolio risk,” she said
(Watch full interview at left)
However, Fan does see some stocks with compelling valuations in the equity markets after the sharp correction that took place over the past couple of months.
“Our strategy is to focus on the defensive and high-quality blue-chip companies which are best-positioned to survive the economic recession, and we favour those sectors which are more defensive and with less exposure to recession risks.”
She highlighted consumer staples, healthcare, telecommunications and utilities as some of the sectors that are most resilient to the global economic downturn. On the other hand, sectors such as technology, commodities and capital goods will most likely be hit by the slowing demand.
“We anticipate further earnings downgrade for these sectors and this will imply that the current valuation will see further erosion risk.
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