Market Predictions for Q4: AI, China Surge

Predictions Surge
Predictions Surge

The final quarter is upon us after a volatile time for equity markets. The S&P 500 rose 0.42% to a record close of 5,762.48 on Sept. 30, as investors continued to bet on themes like the potential for artificial intelligence and interest rate cuts.

Chinese markets have seen renewed interest with the CSI 300 blue-chip index surging 8.5% on Monday — its best day in 16 years. The benchmark 10-year U.S. Treasury yield is hovering around 3.79%. Kevin Teng, CEO of Wrise Private Singapore, mentioned on Sept.

30 that “several uncertainties loom,” such as the upcoming U.S. elections, rising geopolitical tensions, and concerns over an economic slowdown. “These factors could inject volatility into the markets, making Q4 a period to watch closely,” he said. The fourth quarter is starting hot on the heels of central banks’ rate easing cycle.

The U.S. Federal Reserve had a 50 basis-point cut on Sept. 18 while the People’s Bank of China (PBOC) cut both the seven-day reverse repo rate and banks’ reserve requirement ratio on Sept. 24.

Such phenomena decrease the attractiveness of cash, Teng said. The wealth manager said he’s now “focusing on short-duration cash investments.” Among the areas he likes is U.S. equities, thanks to the Fed’s “accommodative policy” and “continued momentum in high-growth sectors like artificial intelligence.”

“In particular, we remain bullish on generative AI and companies such as Nvidia, which continue to experience strong demand from data centers and AI-driven applications,” Teng explained.

ai-driven market momentum

Other themes he likes include real estate and consumer staples which “stand poised to benefit most from lower borrowing costs.”

Teng is bullish on Chinese and Hong Kong-listed equities, adding that his firm upgraded them from neutral to overweight after the PBOC’s announcement last week. “We believe the scale and focus of the measures, particularly the targeted liquidity injection, address the critical issue of insufficient domestic capital flows into China’s stock market,” he explained. “With the new policy framework, we expect a shift towards greater market participation, which should bolster equity performance.

The combination of monetary easing and significant stock market support marks a turning point, positioning China and Hong Kong equities for meaningful upside potential.”

This is how Teng would structure a $50,000 portfolio:

– $30,000 into U.S. indexes exchange-traded funds tracking the Dow, S&P500, and Nasdaq. – $10,000 into global active and short-duration fixed income funds. – $10,000 into money market instruments with a view to add into dips in equities.

“We anticipate more volatility in the U.S. so I would advocate to buy in on the dips and to stay long in the equities market for this year,” Teng said. He added that he also trimmed allocations to gold and alternative assets to “capitalize on the shifting market dynamics.”

Nannette Hechler-Fayd’herbe, head of investment strategy, sustainability and research, and chief investment officer of EMEA at Lombard Odier, is bullish on equities but likes markets that have “lagged behind.” The U.K. is one such market given that its “valuations are attractive and comparable to the forward price-to-earnings you find for emerging markets,” she said. “There is an interesting valuation point about U.K. equities, and given recent positive economic surprises that present potential upsides, we feel this is an attractive market.” Hechler-Fayd’herbe’s comments came as the British pound jumped to its highest level in two-and-a-half years on Sept.

23 following a hawkish rate hold from the Bank of England. Beyond the U.K., Hechler-Fayd’herbe sees potential in emerging markets such as Taiwan and South Korea. Taiwan, she said, stands to gain from “strong secular tailwinds” on the back of growing global demand for semiconductors.

Over in South Korea, she expects equities to see a “meaningful recovery” in their earnings per share in the next six to 12 months thanks to a “continuation of the memory upcycle.”

Elsewhere in Asia, Hechler-Fayd’herbe is looking at Japanese equities — particularly those in the small and mid-cap space — given that the country is in a “geopolitical sweet spot” and is benefiting from a pick-up in inflation and stabilization of consumption levels. Going forward, she believes the country’s “domestic businesses are re-discovering pricing power and the gradual monetary tightening cycle should be helpful for the outlook of banks & insurers.”

Harper Johnson

Harper Johnson stands at the forefront of digital marketing, where she dissects and interprets the impact of online advertising trends, social media dynamics, and search engine algorithms on consumer behavior.

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