Ramin Nakisa, global asset allocation strategist at UBS, recommends that investors shouldn’t take directional bets on markets this year and instead seek out pockets of value in certain regions.
“I don’t think it’s a buy and hold year, I think you have to stay on your toes,” he told CNBC Friday.
“We like risk in DM (developed markets), we like duration in DM. We like DM FX (foreign exchange) versus EM (emerging market) FX, so that’s a kind of a hedge against these risk-off moves we’ve seen over the last week or so.”
Nakisa and his team use a price-to-trend ratio to calculate valuations in equities which levels out the major market fluctuations seen in the last 30 years. On this basis, Nakisa said the pan-European Euro Stoxx 600 index was 30 percent below its long term average and still “cheap” compared to U.S markets. He added that Japan and Australia was also attractive due to more accommodative monetary policy and urged investors to steer clear of emerging markets.
Meanwhile, in the U.S. on Thursday, billionaire investor Mark Cuban revealed he was “doing nothing” about the market sell-off.
“While all the selling seems to be based on China and the price of oil, I really don’t know what the long term implications for our stock market is,” he wrote in a note. “So I follow the number one rule of investing. When you don’t know what to do. Do nothing.”
These calming words come after a brutal start to the year for equities. The S&P Global Broad Market index, which tracks global stock performance, has lost $2.23 trillion in market value this year so far. Stark drops in Chinese markets, sliding crude oil prices and geopolitical concerns, among other factors, have contributed to selling across the globe.
Gina Martin Adams at Wells Fargo Securities – like Cuban – wasn’t fretting about the sell-off and told CNBC Friday that investors hold “hold tight”, “stick to your guns” and “wait it out.”
There was even some optimism from Asia despite China being at the epicenter of this latest tremor. The Shanghai composite has already lost 11.7 percent year-to-date due to step fluctuations in the yuan and fears over the policy being implemented by the country’s central bank.
However, Jing Ulrich, managing director and vice-chairman of Asia Pacific at JPMorgan Chase, urged investors to look at the volatile market, which is still relatively untouched by foreign buyers.
“At this juncture there is no point in being overly negative, because everyone in the market is already very negative. These are among the cheapest markets in the whole world,” she told CNBC Friday.
—CNBC’s Ritika Shah contributed to this article.