Central banks intervened to avoid an insolvency crisis, but the impact of interest rate increases could lead to a deeper recession.
There seems to have been a shift in focus away from inflation and interest rate hikes and towards the subjects of system stability and interest rate cuts.
Modern economic cycles are often characterised by the Federal Reserve raising interest rates until something gives. The banking sector is affected in the current cycle, with three American regional banks and the major Swiss bank Credit Suisse becoming insolvent in March. For reasons of system stability they were placed under receivership, while the central banks provided coordinated liquidity to avoid a general loss of confidence. . Thanks to the rapid intervention, there does not appear to be a systemic crisis in which one insolvency triggers the next.
Therefore, high-quality companies with stable growth should be favoured, especially those with healthy balance sheets, high margins and stable earnings. Bonds have also become attractive again, as they offer a reasonable interest rate. Technology and communications sectors were ahead in March, while cyclical sectors and value stocks suffered significant losses. Timely positioning for quality is important now.
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Investments are associated with a risk of financial losses. Neither historical returns and price developments nor forecasts for the future can serve as a reliable indicator of future returns or price developments. The FI Group is not liable for any losses arising directly or indirectly from action taken solely on the basis of this assessment.
The information contained in this assessment is based on sources that the FI Group believes to be reliable. However, the FI Group accepts no liability for defects, including errors in the sources, printing errors or calculation errors or changed conditions.
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FiducInvest Holding Pte. Ltd.
10 Marina Boulevard
Level 39, #39-00
Marina Bay Financial Centre
018983 Singapore
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