Big investors shore up defences against another August rout

NAOMI ROVNICK AMANDA COOPER

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Big investors are preparing for the normally thinly-traded months ahead with even more caution than usual as risks of oil price volatility or fresh tariff shocks could shake up the complacent market mood and spark a repeat of last August's rout.

Scarred by the sell-off a year ago, when global growth fears hit low volume markets to drive big swings in asset prices worldwide, investors see stocks, bonds and currencies vulnerable against the backdrop of a fragile Israel-Iran ceasefire, seesawing oil prices and trade-war uncertainty.

Asset managers said they were raising portfolio protections given the geopolitical risks and uncertainty about China and Europe striking US trade deals as a July 9 deadline looms.

"Our positioning is that over the (next) three-month horizon markets will not get the positive confirmations they are pricing in," said HSBC Asset Management Global Chief Investment Officer Xavier Baraton.

Mr Baraton is buying equity put options as an insurance, which pay out if stocks fall.

Goldman Sachs' asset management chiefs, recommended in a presentation last week, loading up on protection against sell-off scenarios with volatility, interest rate and market-trend strategies.

MARKET UNCERTAINTY