Why Bank of Singapore is remaining cautious on equities

SINGAPORE (March 14): Bank of Singapore (BoS) is maintaining its moderately defensive asset allocation stance with a preference for credit over equity, as a Fed hike in March is “all but certain” with two more hikes forecast to occur by end-2017.

“Although the market has not priced three hikes by end-2017 yet, the gap between the Fed’s median dots –  which have currently three hikes in 2017 and another three hikes in 2018 – and market pricing has started to narrow,” observes BoS investment strategist James Cheo in a Monday report.

According to Cheo, the bank is retaining its cautious stance on equities as current valuations look elevated and higher compared to the previous Fed hiking cycle of 2004 and 1994.

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