Understand the Market

Buy low, sell high. That’s something every investor hopes to achieve. However, can we really catch the market at the right time? Understand the unique characteristics of the four main cycles of economic expansion and contractions to help you make informed investment decisions, hence better potential returns.

Choose the quote below that sounds most like you.

BOOM

Occurs when a country's national output (also known as Gross Domestic Product (GDP)) is rising strongly. There is usually high demand for goods and services as employment rate is expanding, and companies have increased profits.

During this period, commodities tend to outperform other asset classes and investors may focus on tactical and equity investments.

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RECOVERY

Occurs when real national output (also known as Gross Domestic Product (GDP)) picks up from the low point of the recession. Productivity starts to improve and employment improves.

During this period, equities tend to outperform other asset classes and investors may start to take more risk by investing into equity and high yield bonds.

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SLOWDOWN

Occurs when a country’s rate of growth slows down, but national output (also known as Gross Domestic Product (GDP)) is still rising. Unemployment rate may start to climb and overall productivity and company profits starts to decline.

During this period, cash tends to outperform other asset classes, and investors may start to look at safer and more defensive investment solutions.

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RECESSION

Occurs when there is a fall in the level of real national output for two consecutive quarters (i.e. negative economic growth). When this happens, there will be increased unemployment, and personal incomes and company profits fall.

During this period, bonds tend to outperform other asset classes, and investors may look into high quality bond investments.

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BOOM

Key Characteristics of a BOOM
Suggested Investment Asset Classes*
  • • High GDP Growth
  • • High Manufacturing Activities6
  • • High Inflation Rate1,2
  • • High Consumer Confidence3,4
  • • Low Unemployment Rate
  • • Singapore Equity Funds
  • • American Small Cap Funds
  • • Global Equity Funds
  • • Tactical Funds
To Risk Profiling


*Purchase of the funds indicated here is subjected to UOB’s assessment of customer’s suitability for the product.

RECOVERY

Key Characteristics of a RECOVERY
Suggested Investment Asset Classes*
  • • Positive GDP Growth5
  • • Low Inflation Rate1,2
  • • High Consumer Confidence3,4
  • • High Manufacturing Activities6
  • • Low Unemployment Rate
  • • Asian Income Funds – Equity and Bond
  • • Global High Yield Bond Funds (US and Asian)
  • • Global Equity Income Funds
  • • Emerging Market Bond Funds
To Risk Profiling

*Purchase of the funds indicated here is subjected to UOB’s assessment of customer’s suitability for the product.

SLOWDOWN

Key Characteristics of a SLOWDOWN
Suggested Investment Asset Classes*
  • • Low GDP Growth5
  • • High Inflation Rate1,2
  • • Lower Consumer Confidence than Boom    period3,4
  • • Lower Manufacturing Activities6
  • • Increasing Unemployment Rate
  • • Global Allocation Funds
  • • Defensive Funds
  • • Structured Deposits
  • • Cash
To Risk Profiling


*Purchase of the funds indicated here is subjected to UOB’s assessment of customer’s suitability for the product.

RECESSION

Key Characteristics of a RECESSION
Suggested Investment Asset Classes*
  • • Negative GDP Growth5
  • • Low Inflation Rate1,2
  • • Low Consumer Confidence3,4
  • • Low Manufacturing Activities6
  • • High Unemployment Rate
  • • Singapore Bond Funds
  • • Global/International Bond Funds
  • • High Quality Bond Funds
To Risk Profiling


*Purchase of the funds indicated here is subjected to UOB’s assessment of customer’s suitability for the product.

Key Economic Indicators
  • Consumer Price Index (CPI) measures changes in the price level of consumer goods and services purchased by households
  • Producer Price Index (PPI) measures the average change in selling prices received by domestic producers of goods and services over time.
  • Consumer Confidence Index (CCI) is an indicator designed to measure consumer confidence
  • Retail Sales Indicator is an aggregated measure of the sales of retail goods over a stated time period.
  • Gross Domestic Product (GDP) is indicator of the economic health of a country, as well as to gauge a country's standard of living.
  • Purchasing Managers Index (PMI) is an indicator of the economic health of the manufacturing sector. (Above 50 = Expansionary phase / Below 50 = Contractionary phase)