“Inflation-driven stock market volatility will continue throughout the year.”
Doug Peta, chief investment strategist at BCA Research, a global economic analysis firm, said in an interview with the Korea Economic Daily on the 2nd (local time), “There are not many people who have experienced inflation like it is now. It is reasonable to expect that,” he said.
He predicted that stock prices would move more widely than usual this year due to interest rate hikes and other factors. However, as time goes by, the adjustment range will become smaller. “The market is short-focused and does not stay on one issue for long,” said Peta strategist. “The market will dance according to the consumer price index (CPI) and monetary policy of the US Federal Open Market Committee (FOMC), but the impact will gradually diminish. will,” he predicted.
During these times, he advises, it is better to shorten the holding period than usual. This means buying when the stock price falls relatively large and then selling when the stock price rises. Peta strategist explained, “It is better to hold the buying and selling period shorter than usual and holding more cash.” “This is a way to use volatility as an opportunity.”
Energy and financial stocks were selected as sectors that investors might be interested in. We have taken a neutral stance on tech stocks. In addition to raising interest rates, government regulations are continuing. He predicted, “It is difficult for big tech (large information technology companies) that are already large to rise by an additional 20 to 30 percent.”
He said he sympathizes with the criticism that the US central bank (Fed) is slow to respond to inflation. “The Fed did not expect the CPI to jump 7.5% in January this year compared to the same period of the previous year,” said Peta strategist.
However, his observation is that it is unlikely that interest rates will be raised by 50 basis points (0.5 percentage points) at once. “Even if you look at consumer expectations for inflation, consumer sentiment, and the movement of long-term government bond interest rates, no one will be concerned regarding hyperinflation in the 1920s,” said Peta strategist.
Peta strategist did not expect the war in Ukraine to have a significant impact on US stocks.
New York = Correspondent Young-yeon Kang yykang@hankyung.com
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