Global equities have run up recently; should you chase the rally?
Inflation may be structural in nature and recession is likely. Investors would be prudent to manage their equity exposure
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GLOBAL equities have had a good start to the year. As at end-May, the MSCI AC World Index has delivered returns of more than 10 per cent in Singapore dollar terms.
The rally has driven equity valuations further into the expensive territory, as markets seemingly ignored the risks of slowing growth, elevated inflation, higher-for-longer interest rates and the recent US bank failures. Investors who are planning to chase the rally should think twice.
The US Federal Reserve has been locked in a battle against inflation since it started raising rates back in March 2022. More than a year later, the fight is far from over.
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