Dispersion remained the theme, with the Dispersion Index still elevated. While it could rise further, it’s something to watch—high dispersion typically coincides with low correlations.
This insight outlines several industry and sectoral implications from market developments during the first half of 2025 that argue for greater diversification for multi-asset investors and is supported by lower asset correlations recently.
It is important to understand the fundamentals of any asset to improve the probability of a positive outcome when investing your hard-earned capital. Capital markets have their own version of grading scales when it comes to evaluating assets.
While widely anticipated, the real news about the cut was in the finer points made by Fed Chair in the post-meeting press conference. He said the move was essentially a “risk management” cut which confused investors a bit.
The enthusiasm for all things related to artificial intelligence is akin to that of the dawn of the internet, though many of the circumstances are quite different.
With Fed policy remaining highly data-dependent at this stage of the game, getting policy to neutral is a good starting point. If the upcoming employment data doesn’t improve, or gets worse, in the months ahead, then the voting members will more than likely front-load their rate cuts and get them in before year-end…then on to 2026.
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Financials may shine post Fed rate cut, with strong fundamentals and earnings growth creating new investment opportunities in the sector.
It’s unusual to see both the Dispersion Index and the Implied Correlation Index up at the same time - but stock implied volatility is climbing faster than index-level implied volatility. This is likely because risk is being repriced.
Singapore’s Straits Times Index (STI), covering 85% of the local equity market by capitalisation, is more than just a stock barometer. With a legacy dating back to 1966, the STI has grown alongside Singapore’s economy, and become a regional diversification tool.
Newsbytes covering the ruling related to the Argentina-based energy firm YPF, Bank of Japan and the landing of typhoon Kajiki in Vietnam and China.
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