Principal of diversified asset management solutions in the Asia-Pacific region, Thomas Poullaouec, and his team published a latest report stating that they maintain a biased high allocation to stocks, with recent market declines leading to improved valuations. Value stocks are expected to benefit from loose monetary policy, while high expectations for growth stocks may impact their performance. The unexpected rate hike by the Bank of Japan at the end of July, along with the Federal Reserve's decision to postpone interest rate cuts, and disappointing labor data from the US, led to a global sell-off in risk assets. Japan was one of the stock markets most heavily impacted by the shock. The significant rise in the Japanese yen exacerbated the sharp decline in the Japanese stock market, leading to unwinding of yen carry trades. Market expectations for US economic growth quickly adjusted, with investors concerned that the Federal Reserve may lag behind the situation; the current situation may present more daunting challenges for the Federal Reserve and the Bank of Japan. In the US, recent economic data reflected a deterioration in manufacturing and consumer finances, with subsequent job data also falling short of expectations. Some believe that when interest rates are lowered, the unfavorable impact of high rates on small-cap stocks will decrease, but small-cap stocks are more sensitive to the economic environment, which is the market's current primary concern. Poullaouec stated that given the difficulty in determining whether the economy will experience a soft landing, if there is no clear evidence indicating growth will stabilize, interest rate cuts may not be enough to stimulate small-cap stocks to outperform the overall market. In terms of fixed income, Poullaouec continues to favor parts with higher bond yields, such as high-yield bonds, Asian credit, and emerging market bonds, as the fundamentals overall still provide support.