Investors across Asia are moving to boost their portfolios after the announcement by the US Federal Reserve on Wednesday that it would keep interest rates near zero for as long as needed.
Rates have been anchored near zero since March 15.
After the Fed’s announcement, most stocks in the Asia-Pacific region traded higher on Thursday afternoon.
It was mixed for mainland Chinese stocks by the afternoon, as the Shanghai composite registered a slight increase, while the Shenzhen component lost 0.205%. Hong Kong’s Hang Seng index moved up 1.05%.
Furthermore, the Nikkei 225 in Japan lost 0.13% in afternoon trading, and the Topix index edged down 0.45%. South Korea’s Kospi rose 0.13%.
As the Fed’s two-day policy meeting came to an end, policymakers stated: “Following sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year.”
Indeed, the Fed has affirmed that the US economy will continue to receive support from the central bank, which in turn will provide an additional boost to asset prices.
As a result, savvy investors throughout Asia and across the world are now moving to top up their portfolios ahead of future announcements by the Federal Reserve.
Many economists are of the opinion that the Fed’s stance on rates indicates they are unlikely to increase substantially for a while yet.
Gregory Daco, chief US economist at Oxford Economics, said: “We forecast that rate lift-off will not take place until mid-2024 as inflation struggles to reach 2% on a sustained basis and the unemployment rate lags [behind] improvement in the overall economy.”
As a result, this ongoing support from the Fed is acting as a backstop for stocks.
The US central bank’s worries over the economy highlight that additional measures may well be introduced, which is why investors are topping up their portfolios now, as it is likely entry points will edge higher moving forward.
Taking a closer look at the stock markets, not all stocks and sectors are rising in line with one another. Indices are rising across the board by sectors including technology, biotech, online retail and home entertainment, among others.
As such, investors should consult a good fund manager to seek out the stocks with the highest probability of creating and growing wealth in the long term.
The Federal Reserve’s cautious tone at this two-day meeting, and chairman Jerome Powell’s pledge to use “our full range of tools to support our economy in this challenging environment,” will provide investors with the confidence they require to boost their portfolios further.
Nigel Green founded deVere Group in 2002 from a single office in Hong Kong after discovering a niche market for expatriates in the financial services sector. Since then, it has grown to become one of the largest independent financial advisory organizations in the world with offices and clients across the globe.