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AS markets recover, developed-world stocks in the United States and Europe are still not expensive while bonds are, said Kevin Gardiner, global investment strategist at boutique wealth manager Rothschild Wealth Management, which has 21 billion euros (S$31.8 billion) in assets under management around the world, and under a tenth of that in Asia.
Excluding energy and mining, "profits are looking OK", he said. The US consumer is bolstered by higher incomes and is driving growth, while he has not borrowed recklessly to spend, Mr Gardiner said. "We're not talking about a boom, but markets are talking about a recession. We don't see that in the data yet. Markets look ahead but they may be looking too far ahead."
Fears of another 1997 Asian financial crisis are premature, he added. He noted that leading indicators for major Asian economies and rich-world countries are showing below-trend growth, but Asia looks to be stabilising. Asian countries are also not showing economic imbalances such as current-account deficits and high import growth, unlike in 1997.
"Things are qualitatively less fragile than in 1997. . . So I'm cautiously reassured."
Mr Gardiner, who has been pessimistic on emerging markets, said valuations there have come down and he is looking for reasons to be more positive. This can happen if the US Federal Reserve raises interest rates and no big portfolio outflows occur, he said.
Rothschild's portfolio managers have been adding more energy-sector cyclicals in recent months, such as an oilfield engineering company. Another recent addition was a UK bank.
Consumer stocks are still worth holding for the long term, he said. Healthcare names have been frothy but have good long-term prospects.
"Defensives wouldn't be my favourite sector but you'd want to have something," Mr Gardiner said.