00:00Let's get a broader view on these markets right now because of course there are growing bets of an interest rate cut by the Federal Reserve and that has kept global
00:07gauge of equities, the global gauge of equities, a global gauge of equities on track for its best week since June. For more market analysis let's bring in Memesh
00:15I up head of managed solutions advisory Dubai at Bank of Singapore. Memesh thank you for your time. Let's start on the rate cut expectations and what assumptions are you making about
00:25December and if they do cut in December the Federal Reserve could it be a hawkish cut given the constraints around inflation. Good morning Tom and
00:35thank you for having me on. So I think the really crucial thing to understand is let's look at what the market has been pricing in for that
00:41December Fed rate cut just over one week. It's been as low as a 30 percent probability and it's now back up at 80 percent probability. And I think
00:50that's very much in line with the kind of what we've been seeing in equity markets and that relief rally as such.
00:59So you expect a cut from the Fed in December. Exactly those those position the positions the betting on the Fed have adjusted. You had Jay
01:07Powell coming out a few weeks just a few weeks ago suggesting that December was very much in play. Nothing was locked in. And then you had some Fed
01:13officials very close to Jay Powell in recent days suggesting that this is very much very much a live meeting. We've seen the pricing
01:20around that then in the options markets pricing and more than 80 percent chance that the Fed goes in December. If you think beyond
01:26December and into 2026 what is the trajectory looking like particularly if we get more dovish members and a more dovish head of this
01:32Federal Reserve. So the Bank of Singapore view is actually that the Fed will take a pause in the first quarter of next year up until the
01:42second quarter potentially simply because we don't have clarity around the who net who the next Fed chair is likely to be. But I
01:49think the key thing to understand is that uncertainty that you're referring to. It's currently priced at 80 percent probability. But
01:56depending on what Fed official says tomorrow or the day after or early next week that probability could change again. And those
02:03gyrations you're seeing in the equity market and volatility across rates is essentially reflective of that uncertainty around
02:11Fed policy. When we take a step back and we think about macro in general we've seen as we've come into the fourth quarter a lot of
02:18optimism baked in not just with regards to the Fed easing but also with regards to AI. And that as you've seen that optimism fade you've seen
02:26increased volatility. And that is adjusting our positioning going forward.
02:33Give us more detail in terms of the positioning going forward then Mevesh. Particularly as we think about additional fiscal stimulus coming
02:37through from the U.S. from the so-called big beautiful bill and the tax cuts that will really start to take to take effect in
02:432026. You could get a fiscal impulse coming through from Japan and the new leadership there. And of course Europe continues to spend heavily on
02:49defense and infrastructure particularly Germany. All of those things coming together in an environment where you may have lower rates and
02:56yet you're concerned about uncertainty. You're concerned about potential volatility. How do you think about positioning then in the
03:01quarters ahead. So in the medium term when we think about a whole portfolio advisory context we are still overweight risk
03:10assets. But it is a lot less than what it was at the beginning of the year. So we are essentially really only overweight Asia
03:17Pacific X Japan equities. We were overweight European equities earlier on. But that was essentially taking a profit. So our risk
03:23position has gone down. But it's still overweight. And that is reflective of the fact that we are in a non recessionary environment and in
03:31Fed easing cycle which tends to support risk assets. Now if we look at the detail across the different asset classes we are a little bit
03:38overweight on equity. We are quite broadly diversified in fixed income. But what we're really talking about and really pushing for clients is that
03:45diversification and how to get that over the next 12 to 18 months to protect your portfolio from the risks that we're seeing and potential
03:54downside in equity markets and volatility rates. And there's two key areas there really. There is having really good diversification in equity. So yes it's all about U.S. and
04:03tech but have other regional exposure have other factor exposure other than growth and have other style exposure and also thinking about gold and
04:15alternatives. What what is the what is the overweight the overweight on a pack Mavish. Is that a China story. Is it a career exposure to AI story. What is what is the
04:26rationale for that view. So it is predominantly in China and Hong Kong equity story. And the reason there being you've still got sufficient tailwinds from
04:37a valuation perspective with respect to its own history as well as alongside pairs when especially when you compare versus valuations in the U.S.
04:45market. But you also have the region which is likely to benefit from the weaker dollar that we've seen since the beginning of this year. And it's still a
04:53beneficiary of the easing cycles that we're seeing more broadly in developed markets but particularly in the Fed. So there's still a lot of
05:00tailwinds there. And even though we do acknowledge the fact that it has had a phenomenal run year to date the numbers that we're seeing. But
05:08I do think that was a story waiting to happen in this. There's more momentum to go there. And you talked about gold as a potential hedge or at
05:16least an asset to think about in terms of hedging some of this uncertainty into next year. What is your view on how much further gold has to
05:23run from here. Yeah gold gold is tricky. We don't try to think too much about how much you can run from it but more from a portfolio
05:31context. It does add valuable diversification in the context that we have higher inflation or even stagflation environment.
05:39It also hedges against geopolitical risk which as we know with the U.S. administration and the flip flopping of policy I think is very
05:47important going forward.
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