SINGAPORE (June 30): The Bank of Singapore (BoS), a subsidiary of Oversea-Chinese Banking Corporation (OCBC), remains “overweight” on the US financial sector due to the potential de-regulation for US banks as well as their prospects for higher-than-expected rates.

In a fully-valued and sideway market, it continues to advocate for investors to employ a rotation strategy – namely rebalancing out of overvalued sectors like technology, and rotating into undervalued sectors such as US financials.

“We think the markets are underpricing inflation and the Fed’s hiking cycle. If inflation expectations were to increase and the Fed to raise rates according to its plans, the financial sector could benefit from it,” comments BoS investment strategist James Cheo in a Friday report.

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