The global economy will likely slow down from the second quarter of 2011 and investors should scale back risk as companies warn of headwinds in the coming quarters, Michael Preiss Chief Equity Strategist at Standard Chartered Bank told CNBC.
"The earnings seasonhas shown us that the problem is in the guidance...Everything looks good looking backwards but going forward we expect more headwinds. And this is where companies have reaffirmed that the guidance is increasingly a big question mark," Preiss said.
"The real issue is this: the curse of inflation is negating the blessing of low interest rates," said Preiss. "This is why going forward in the second quarter and for the half year going forward we expect actually a slowdown in the (mainly Asian but also global) economy and also to some extent more moderation, the stock market."
"Investors need to be more selective and now is a great time time really to look at the portfolio, re-balance and maybe scale back some risk and invest in some quality names that have the ability to obtain margins," Preiss said.
He recommended investing in companies that have strong balance sheets and the ability to pass on higher costs to consumers.