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| David Wong, senior investment strategist at AllianceBerstein, speaks during an online press conference held in Seoul, Tuesday. Courtesy of AllianceBerstein |
By Lee Min-hyung
The U.S. Fed's planned rate hikes will not necessarily exert downward pressure on the global stock market, even if investors refrain from taking risks at this period of monetary normalization, AllianceBerstein said Tuesday.
David Wong, senior investment strategist at the asset management company, advised investors to be aware of widespread skepticism that global stocks will enter a bear market in 2022 after enjoying a powerful rally for the past two years since the outbreak of the pandemic.
"Since 1930 in the U.S. equity market, the average bull market has lasted for five years and the typical upside has been 250 percent, so we do not necessarily think that there is a natural upper limit on the expansion and the earnings growth that comes with it," he told reporters during a press conference.
Despite the optimistic outlook, he urged investors to carefully pick and choose blue-chip stocks with stable profitability, rather than taking unnecessary risks. This is because the economy is in a cycle of monetary tightening when investors cannot expect as much profit as they reaped during the early phase of the pandemic outbreak back in March 2020, according to Wong.
Investors should not take such an aggressive investment strategy at this point, and focus more on maintaining stability when making stock investments, he stressed.
The asset management firm also expected the Fed to raise the key rate three times this year.
"Our forecast is that the Fed will raise its key rates in March, June and September after finishing tapering," Yoo Jae-heung, a senior bond investment strategist at the company, said. "Our view is the Fed will wait and see the impact of the rate hikes in the fourth quarter when it is unlikely to increase the benchmark rate further."
Regarding the growing inflationary woes in the world's largest economy, Yoo said the U.S.' price levels would be on the decline sometime in the second half of 2022 due to the Fed's monetary policy shift.
The strategist also expected the Bank of Korea to continue increasing the key rate to as high as 1.75 percent this year. The Korean central bank recently raised the key rate to 1.25 percent.
It preemptively raised the rate back in August of last year followed by three more hikes after cutting it to a record low of 0.5 percent in May 2020.
