Given the current uncertainties, global equities could remain volatile and dip by another 5-7% should the conflict escalate even further. While the overall situation remains fluid, markets could recoup the losses very quickly once the tensions dissipate. Notably, previous episodes of geopolitical events rarely have a lasting impact on the economy and markets as long as the military conflicts remain relatively localised. We continue to maintain the base case that a negotiated resolution is still the preferred option for the parties involved to minimise economic and political costs.

Despite the near-term uncertainties, we continue to see reasonably attractive risk-reward in equities as returns will likely remain supported in the medium-term by above-trend economic growth and robust corporate earnings. Beyond equities, investors should have exposure in other asset classes including Fixed income and Gold. In addition, we suggest investors to maintain a cash buffer and ensure the portfolio is not over-leveraged to mitigate the downside risks. By maintaining a diversified portfolio, it would help investors better mitigate the current uncertainties in order to achieve more resilient investment returns.

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