Why Standard Chartered Wealth is overweight on these three sectors

Steve Brice, Chief Investment Officer at Standard Chartered Wealth Management is overweight on consumer discretionary, industrials and healthcare sectors.

We are in the pre-election cycle now which is generally good for stocks, he said, adding, "we think the consumer story is likely to remain robust as we go through the first half of the year. Obviously, continued government spending is a positive. On the industrial side, seeing incentives coming through for increased investment that might kick in the second half of the year.. So those are obviously the procyclical elements of the market. And then we are overweight healthcare at the global level and in India as well. Bit more defensive in nature."

Brice is bullish on the Indian market citing favorable macroeconomics and earnings prospects along with more reasonable valuations compared to recent times.

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However, Brice also cautioned about global market conditions, noting a significant rise in real interest rates, signalling a tightening of financial conditions.

Brice expects three rate cuts by the US Fed coming in the second half of the year.

This, according to him, poses a headwind for the economy, indicating that challenges persist. Brice drew attention to historical indicators, suggesting that key recession-predicting metrics have been activated, raising concerns about the possibility of a soft landing managed by the Federal Reserve.

"That said, as we head into the beginning of 2024, we believe that narrative is probably going to strengthen rather than weaken which could lead to the S&P 500, for instance, going on and testing all time highs. We wouldn't necessarily be confident at this stage projecting stock market gains through the second half of the year. But we think we're going to start on a pretty strong foot," he concluded.

 

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