Early-Year Asset Allocation Strategy: "Rising Outlook for Developed Countries' Sensitive Sector Stocks"

[Asia Economy Reporter Ji Yeon-jin] As the financial market, which experienced increased volatility due to the spread of the Omicron variant and the normalization of monetary policies in advanced countries, stabilizes, the prices of risk assets such as cyclical sectors in advanced economies that led economic improvement through asset allocation strategies at the beginning of the year and industrial metals are expected to maintain an upward trend for the time being.

According to a report published on the 2nd by NH Investment & Securities, unlike Europe, which implemented re-lockdown measures, the United States has seen a rapid increase in COVID-19 cases but is responding by strengthening vaccine incentives. Also, U.S. households hold high levels of cash assets, and consumption remains robust. This indicates that the global economic recovery trend due to the resumption of production and the transition to With-Corona remains valid.

At last month's U.S. Federal Open Market Committee (FOMC) meeting, the Federal Reserve decided to double the tapering scale. The timing of the base interest rate hike is also expected to accelerate. In Europe, the Bank of England (BOE) has raised its base interest rate, accelerating the normalization of monetary policies in advanced countries. While caution is needed regarding assets that have risen sharply due to some liquidity, the massive liquidity released since 2020 still remains in the market, and since economic improvement is accompanying this, it is not yet a time to worry about a sharp decline in risk assets.

Oh Tae-dong, Head of the Research Center at NH Investment & Securities, said, "Geopolitical risks from Russia and Ukraine and the resulting surge in European energy prices are also inflation risk factors, but inflation is not expected to damage the global economy," adding, "The prices of risk assets such as stocks in cyclical sectors of advanced economies leading economic improvement and industrial metals are expected to maintain an upward trend for the time being."

This content was produced with the assistance of AI translation services.