We are moving to a more conservative portfolio as I am very concerned that the recent recovery from the January correction is beginning to lose steam. Judging from the strong inflation and growth data from US, there is a likelihood that the US Central Bank will rise interest rates more than expected this year, which will wreck the capital liquidity of emerging market. With the Hongkong property already in correction mode (fallen 14%), a rise in US interest rates will lead to a squeeze to the overinflated property prices in Asia and may accelerate the fall. China is doing its best to simulate the economy by flooding the economy with fresh cash but I believe that the recent surge in economy data may be short lived as China embarks on restructuring their state owned companies with potentially millions out of jobs.
Therefore, I have decidede to remove the entirety of our Asia exposure while still maintaining the RSP invested into Asia. A dollar cost average approach into a falling market is still one of the best strategy in investment management. Meanwhile, due to the concern of a potential undesirable outcome from the Brexit vote (Britain voting to stay or exit Euro) in june, I have halved our Europe exposure. I believe that UK will vote to stay in Euro and the European stock market will get a jot should that come to pass.
Our portfolio will look like this after the Switch:
America: 20%
Europe: 30%
USD Bonds (Cash) or International Bonds (CPFOA/SRS): 50%
Based on the data in June, I will probably move to a more conservative portfolio after the impact of the US Fed's interest rates decision which will have a huge influence n the global financial markets.
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