Mumbai: Staying in cash and waiting for the right opportunities to come by could prove rewarding in the new year that’s likely to be more volatile than 2018, according to Pacific Investment Management Co.

“We are cautious on our overall risk positioning," said Roland Mieth, Singapore-based emerging-markets portfolio manager at Pimco, which oversees about $1.7 trillion. “Both in Asia and globally, we’re looking to maintain exposure to high-liquid portions of the market as well as increasing cash."

Pimco joins investors including JPMorgan Asset Management in questioning global expansion forecasts for 2019 amid the ongoing US-China trade spat and shrinking of balance sheets by central banks. The Federal Reserve’s commitment to continue reversing stimulus of the past decade would lead to steepening of the yield curve in Asia, according to Mieth.

A gauge tracking bets for swings in stocks, rates, currencies and commodities globally is holding near a two-year high reached on December 10. The Bank of America Merrill Lynch Market Risk indicator is still in negative territory though, and has been under zero — signalling less stress than normal — for the past two years.

“We’re not adding risk at the moment because we think it pays to wait, and our base case is to wait for the first half of next year," Mieth said in an interview. “We are looking for opportunities in the short-end of the curve as part of our cash-management strategy. We are looking to keep the powder dry."

While Pimco is broadly cautious in its outlook on emerging market sovereign bonds, the money manager finds debt in India, Indonesia and China attractive.

“We like India, Indonesia and China, in that order, and where we would like to potentially add," said Mieth. “We will remain more neutral on countries including Korea, Malaysia, the Philippines and other low-yielders around the region."

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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