NEW YORK (Reuters) - A global sell-off in stocks that started in May is not over and may only be just starting, Abhijit Chakrabortti, global equity strategist at JPMorgan Chase & Co., said on Tuesday.
"This is nothing compared with what we may see late in the summer and early October -- once slower growth finally sinks in and expectations for higher benchmark rates, at 6 percent or even more, come out," Chakrabortti told the Reuters Investment Outlook Summit in New York.
Chakrabortti said the market correction may exceed 10 or even 15 percent before it abates. In some sectors, such as materials, commodities and certain consumer staples, including Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research) and Procter & Gamble Co. (PG.N: Quote, Profile, Research), declines may surpass 30 percent.
"Sectors most dependent on growth and the companies most dependent on volume and price declines, which also includes tech companies, should be avoided," he said.
JPMorgan's model asset allocation portfolio is recommending clients to invest 20 percent of their holdings in cash and 25 percent in bonds. The remaining 55 percent is distributed among equities in the United States, the UK, Western Europe and Japan. Still, the portfolio is underweight in U.S. stocks.
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