The sharemarket is stagnating in the current environment and could either deteriorate or resume its growth trajectory, investors have been warned.
The market hasn’t priced in the full risk of the Eurozone shutting down or the full upside potential should global markets improve, and investors need to be aware of the implications across their portfolio, according to Aberdeen’s senior product and investment specialist Leanne Bradley.
Investors shouldn’t go out on a limb with growth assets, nor be too defensive, Bradley said.
Even those who are investing in fixed income as part of more defensive share portfolio need to be wary of implications for the credit market if the Eurozone implodes, she said.
Bradley warned that the resulting uncertainty in the market was causing extreme sensitivity to any new information about to be released, underscoring the uncertainty among investors – and shares were likely to be overbought or oversold as a consequence. Volatility was likely to continue and investors will have to wait until the fourth quarter for better returns to start rolling through, she said.
Aberdeen was holding a defensive position, favouring property trusts ahead of equities, and Australian equities ahead of international equities, Bradley added.
