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A global strategy chief shares 3 ways investors can navigate increased stock-market volatility in the coming months

A global strategy chief shares 3 ways investors can navigate increased stock-market volatility in the coming months

trader Gregory Rowe
NYSE trader Gregory Rowe works on the floor of the New York Stock Exchange at the end of the trading day.


  • Willem Sels, HSBC Private Banking global chief market strategist, expects volatility to pick up in the next few months due to the US election and a renewed uptick of COVID-19 cases. 
  • In a Tuesday email he shared three strategies for how investors can manage the stock market volatility ahead. 
  • One of his strategies is to avoid the lure of low-quality stocks just because they’re cheap.  Instead, Sels said to seek out companies with strong balance sheets and long-term growth potential.

The upcoming US election and an uptick in cases of COVID-19 are leading to increased volatility and causing some investors to step back. Willem Sels, HSBC Private Banking global chief market strategist, expects volatility to pick up in the next few months, but said investors should remain in the market. In a Tuesday email he shared three strategies for investors to manage what’s ahead. 

1. Focus on quality assets

“What the September correction has shown is that, when valuations are high, it is unwise to go into lower quality assets just because they are cheaper,” Sels said. Investors should seek out companies with strong balance sheets as COVID-19 will continue to weigh on cash flows for longer than expected. For long-term growth, Sels is watching companies related to climate change, health technology, 5G, and the online economy.

2. Look for areas with promising growth

Sels also said he’s looking for areas with “promising growth” in the short and long term. “The US economic outlook currently looks better than in Europe, and data in China and Korea is more positive than in other EM countries,” he added.

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Emerging-Market Traders Cut Wagers on U.S. Election Volatility

Emerging-Market Traders Cut Wagers on U.S. Election Volatility

(Bloomberg) — Traders across the world may be coming around to the idea that the U.S. election isn’t going to be the tumultuous event it was once expected to be.

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But the real believers seem to be in emerging markets.

Optimism that the November election result will go uncontested and speculation a U.S. stimulus package will be agreed whatever the outcome are damping concern about fluctuations through year-end. Yet, while U.S. VIX futures declined last week as bets on likely price volatility eased, the drop was slower than for emerging markets.

“It does appear that emerging-market investors are slightly more sanguine about risks through the end of the year than what you’re seeing in developed markets,” said Nick Stadtmiller, a strategist at Medley Global Advisors in New York. “As long as global liquidity remains ample, and as long as global markets at least hold their ground, I would expect emerging-market assets to perform well. Yields on many emerging-market assets are high, especially relative to rock-bottom yields on developed market assets.”



chart: EM volatility index trades at a discount to the VIX gauge for U.S. stocks


© Bloomberg
EM volatility index trades at a discount to the VIX gauge for U.S. stocks

Falling volatility may give investors more confidence to put cash into an asset class enjoying one of its best phases since the virus-induced global sell-off in March. Citigroup Inc. said last week the worst is over for developing-nation assets and Morgan Stanley is betting volatility will continue to ease as the outcome of the November vote becomes clearer.

Emerging-market equities and currencies climbed to an eight-month high on Friday, while local-currency bonds had their best week since May on the prospect of U.S. fiscal stimulus. One-month implied volatility on the Brazilian real, South African rand and Russian ruble fell by the most among peers last week, signaling improved appetite for risk assets.

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Emerging-Market Traders Cut U.S. Election Volatility Wagers

Emerging-Market Traders Cut U.S. Election Volatility Wagers

(Bloomberg) — Traders across the world may be coming around to the idea that the U.S. election isn’t going to be the tumultuous event it was once expected to be.

Loading...

Load Error

But the real believers seem to be in emerging markets.

Optimism that the November election result will go uncontested and speculation that a U.S. stimulus package will have to be agreed whatever the outcome are damping concern about fluctuations through year-end. Yet, while U.S. VIX futures declined last week as bets on likely price volatility eased, the drop was slower than for emerging markets.

“It does appear that emerging-market investors are slightly more sanguine about risks through the end of the year than what you’re seeing in developed markets,” said Nick Stadtmiller, a New York-based strategist at Medley Global Advisors. “As long as global liquidity remains ample, and as long as global markets at least hold their ground, I would expect emerging-market assets to perform well. Yields on many emerging-market assets are high, especially relative to rock-bottom yields on developed market assets.”

Falling volatility may give investors more confidence to put cash into an asset class enjoying one of its best phases since the virus-induced global sell-off in March. Citigroup Inc. said last week the worst is over for developing-nation assets and Morgan Stanley is betting volatility will continue to ease as the outcome of the November vote becomes clearer.



chart: EM volatility index trades at a discount to the VIX gauge for U.S. stocks


© Bloomberg
EM volatility index trades at a discount to the VIX gauge for U.S. stocks

Emerging-market equities and currencies climbed to an eight-month high on Friday, while local-currency debt had its best week since May on the prospect of U.S. fiscal stimulus. One-month implied volatility on the Brazilian real, South African rand and Russian ruble fell by the most among peers last week, signaling improved appetite for

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Gridlock over new stimulus measures is the biggest catalyst for market volatility right now, a chief strategist says

Gridlock over new stimulus measures is the biggest catalyst for market volatility right now, a chief strategist says

Pelosi Mnuchin
  • The lack of progress in reaching an agreement on US fiscal stimulus is the biggest “catalyst” of market volatility for stocks right now, National Securities’ chief market strategist Art Hogan told CNBC Wednesday. 
  • He said: “The No. 1 catalyst in this market causing the most volatility is the path of fiscal policy and whether we can get that out of the Beltway.” 
  • Hogan said markets are less concerned about the US election result. 
  • US president Donald Trump signaled an end to stimulus talks this week, but later called for a standalone bill to help the airline industry. 
  • Visit Business Insider’s homepage for more stories.

The gridlock in Washington DC between US lawmakers over a new economic stimulus package is the biggest catalyst for market volatility, rather than the upcoming election, National Securities’ chief market strategist Art Hogan told CNBC’s “Trading Nation” Wednesday. 

“The number one catalyst in this market causing the most volatility is the path of fiscal policy and whether we can get that out of the Beltway,” Hogan said. “We need more fiscal policy stimulus. We’ve heard that from the Fed. We’ve certainly heard that from economists.” 

US president Donald Trump ended talks between Democrats and Republicans until after the election on Tuesday. He later urged lawmakers to approve $1,200 stimulus checks for American taxpayers, small business aid, and direct assistance to airlines to prevent layoffs.

Democrats and Republicans have been stuck in a stalemate over the size of the next fiscal plan since July, although House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have signaled that they have made some progress in recent days.

But even though a full fledged fiscal plan is unlikely before the US election, markets watchers have been welcoming the prospects for a standalone bill for

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