INVESTORS should adopt a wait-and-see strategy in the volatile fixed-income market, says John Lim, the recently appointed managing director of Chase Manhattan Asia.
''I recommend it is better to sit tight right now and wait for the dust to settle and a clear trend to emerge,'' Mr Lim said.
''You can make money on the ups and downs but, with all this uncertainty, it's probably better to take your money to Macau and gamble it. Bond and equity markets are not behaving rationally.'' World bond markets and, to a lesser extent, stock markets have been very jittery since the United States began lifting rates in February.
Hong Kong, with its economy closely linked to the US through the dollar peg, has been no exception.
''There is a lot of concern and uncertainty because we had been enjoying a bull run and there hasn't been a bear market for about five years,'' Mr Lim said.
''The trend is still not clear as to whether rates will rise or fall from here after these many hikes. The tightening will probably put a brake on the US economy and keep a lid on inflation.'' Mr Lim said the large amount of leveraged activity in world bond markets made it difficult to gauge underlying market trends. Highly-leveraged hedge funds had been active in the US and European debt markets.
In Hong Kong, some of the most highly-leveraged participants have been high-worth individuals.
