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The global investment bank's latest weekly market view suggests it's time to rebalance portfolios as risk assets show dangerous signs of over-positioning
The champagne may be flowing at Singapore's wealth management offices, but Standard Chartered's Chief Investment Office has just delivered a sobering message that should give the Lion City's high-earning professionals pause for thought. In their latest weekly market view released on 11 July 2025, the bank's top strategists are warning that "risk assets are due for a consolidation, coinciding with a short-term bounce in the US dollar."
For Singapore's affluent investors—from private banking clients in Orchard Road to family office principals managing nine-figure portfolios—this isn't merely another cautionary tale. It's a tactical recalibration that could determine whether your wealth preservation strategy thrives or merely survives the turbulence ahead.
The Positioning Problem: When Everyone's on the Same Side
Standard Chartered's analysis reveals what seasoned investors should recognise as a classic danger signal: extreme positioning. "After a strong rally, investor positioning in US and European equities, global high yield corporate bonds, Emerging Market equities and local currency bonds look stretched," the report states unequivocally. "Such extreme one-sided positions raise the risk of a short-term reversal."
This isn't investment bank hyperbole—it's backed by hard data. The bank's proprietary market diversity indicators, which measure fractal dimensions to assess investor positioning, have fallen below the critical 1.25 threshold across multiple asset classes. US equities registered 1.22, European equities 1.17, and Asia ex-Japan 1.20. When these technical indicators flash red simultaneously, it typically precedes significant market corrections.
The implications for Singapore's investment community are profound. Many local high-net-worth individuals have benefited handsomely from the risk-on rally, particularly those with substantial US equity allocations. But as Standard Chartered's strategists note, this very success has created vulnerability.
The Rotation Imperative: Where Smart Money Should Move
Rather than simply advocating defensive positioning, Standard Chartered's team offers a more nuanced approach that should resonate with Singapore's sophisticated investor base. "We would use any near-term volatility to reduce any over-exposure to US markets and rotate into our preferred assets, including China and Korea equities in Asia ex-Japan and EM local currency bonds," the report advises.
This recommendation carries particular weight for Singapore investors, given the city-state's role as a regional financial hub. The rationale is compelling: Asian markets, particularly China and Korea, offer "policy support, attractive valuations" whilst benefiting from rotational flows within emerging markets. For Singapore's family offices and private banks, this represents an opportunity to capitalise on home-region expertise whilst diversifying away from crowded US positions.
The emerging markets local currency bond recommendation is equally astute. As Standard Chartered notes, "EM local currency bonds are likely to continue to benefit from a weak USD and EM rate cuts." For Singapore investors seeking yield in a low-rate environment, this asset class offers both currency upside and central bank tailwinds.
The UK Gilts Opportunity: A Contrarian's Delight
Perhaps most intriguingly for Singapore's British-influenced financial community, Standard Chartered maintains a bullish stance on UK government bonds. "We remain bullish on UK government bonds," the report states. "While concerns that the government could relax its fiscal consolidation plans drove yields higher, we see slowing growth leading to BoE rate cuts later this year, dragging gilt yields lower."
The bank's specific target is revealing: a 3-month 10-year gilt yield target of 4.25-4.50%, compared to the current 4.6%. This represents a meaningful capital appreciation opportunity for those willing to take a contrarian stance. Given Singapore's substantial UK-linked investment flows and the prevalence of Sterling-denominated assets in many local portfolios, this could prove particularly relevant.
Q2 Earnings: The Technology Sector's Moment of Truth
For Singapore's tech-focused investors—a significant cohort given the city-state's emphasis on digital transformation—Standard Chartered's earnings outlook provides crucial guidance. The bank expects US Q2 earnings growth of 5.8% year-on-year, with communication services leading at 31.8% and technology at 17.7%.
"The Q2 earnings season will kick off in earnest when the major banks start reporting on 15 July," the report notes. "According to LSEG I/B/E/S estimates, Q2 earnings rose by 5.8% y/y; this consensus estimate has been lowered from 10.2% growth expected on 1 April, setting a low hurdle to beat expectations."
This lowered bar could benefit Singapore investors maintaining US technology exposure. Standard Chartered remains "overweight the financial, technology and communication sectors," anticipating that "AI investments continue to drive growth for semiconductors and sovereign AI demand could offer upside."
The Asian Advantage: Playing to Singapore's Strengths
The most compelling element of Standard Chartered's analysis may be its Asian equity thesis. "Valuations of Asia ex-Japan equities remain compelling, with the weak USD lowering import costs, supporting companies' earnings," the strategists explain. "The region can benefit from 'rotational flow' within EM equities, such as outflows from Brazilian equities."
For Singapore's investment community, this represents an opportunity to leverage regional expertise and proximity. The bank specifically favours "markets such as China and Korea, which have strong domestic policy support, which can boost corporates' earnings growth projections."
South Korea's performance has been particularly impressive, with the Kospi index leading Asian markets in the first half of 2025. As The New York Times reported, "South Korea's stock market is the best performing in Asia, by a wide margin, in the first half of 2025."
Currency Considerations: The Dollar's Temporary Resurgence
Standard Chartered's expectation of "a short-term bounce in the US dollar" carries significant implications for Singapore's currency-conscious investors. The bank anticipates this will coincide with risk asset consolidation, potentially creating tactical opportunities for those positioned accordingly.
For Singapore dollar-based investors, this dynamic could provide attractive entry points into non-USD assets during any volatility. The bank's outlook for AUD/USD and NZD/USD suggests these currencies "can rise further following policy pause and extension of US tariff deadlines."
The Practical Implementation
For Singapore's high-net-worth community, Standard Chartered's recommendations translate into concrete portfolio actions:
Reduce: Over-exposure to US equities, particularly in stretched sectors Rotate into: China and Korea equities, emerging market local currency bonds Maintain: Technology, communication, and financial sector exposure for Q2 earnings Add: UK gilts on weakness, targeting 4.25-4.50% yields
The timing element is crucial. As Standard Chartered notes, "we would use any near-term volatility" to implement these rotations. This suggests patience rather than panic, waiting for market dislocations to create optimal entry points.
The Singapore Context: Why This Matters Now
Singapore's position as Asia's wealth management hub makes these recommendations particularly relevant. The city-state's investors have traditionally demonstrated sophisticated understanding of both Western and Asian markets—exactly the type of diversified thinking Standard Chartered advocates.
Moreover, Singapore's family offices and private banks are increasingly focused on regional opportunities. Recent data from FundSelector Asia confirms that "South Korea stocks performed best among Asian equity markets in the first half of 2025 as investors anticipated corporate governance reform."
The regulatory environment also supports this approach. Singapore's wealth management framework, overseen by the Monetary Authority of Singapore (MAS), encourages diversified investment strategies that can weather market volatility.
The Technical Warning: When Numbers Don't Lie
Standard Chartered's fractal dimension analysis provides a quantitative foundation for their concerns. These proprietary indicators, which measure market diversity and positioning extremes, have proven reliable predictors of market reversals. When multiple asset classes simultaneously register readings below 1.25, it typically signals dangerous crowding.
The current readings are sobering: US equities (1.22), European equities (1.17), UK equities (1.13), Asia ex-Japan (1.20), and emerging markets ex-Asia (1.18). Such uniformly low diversity measures suggest that a significant portion of global capital is positioned similarly—a classic setup for sharp reversals.
Looking Ahead: The Medium-Term Outlook
While Standard Chartered's immediate focus is on positioning for near-term consolidation, their medium-term outlook remains constructive. The bank's H2 2025 Global Market Outlook, released on 10 July, projects "a constructive but volatile environment" for markets.
This balanced view should reassure Singapore's long-term investors whilst emphasising the importance of tactical positioning. The message isn't to abandon risk assets entirely, but rather to rebalance thoughtfully ahead of potential turbulence.
The Bottom Line for Singapore Investors
Standard Chartered's latest market view represents more than routine investment commentary—it's a strategic recalibration guide for sophisticated investors. For Singapore's high-earning professionals, business owners, and family office principals, the recommendations offer a pathway to preserve and potentially enhance wealth through what may prove a challenging period.
The bank's emphasis on Asian equity rotation, emerging market local currency bonds, and UK gilts provides a balanced approach that plays to Singapore's regional strengths whilst maintaining global diversification. Most importantly, the focus on using "near-term volatility" as opportunity rather than threat reflects the kind of contrarian thinking that has historically rewarded Singapore's most successful investors.
As markets navigate this period of stretched positioning and potential consolidation, Standard Chartered's guidance offers a roadmap for turning challenge into opportunity. For Singapore's investment community, that may prove the difference between merely surviving market turbulence and emerging stronger on the other side.
The Standard Chartered weekly market view is available on their Hong Kong market outlook page. Past performance is not indicative of future results, and all investments carry risk.
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