Defense Strategies During Global Economic Uncertainty

Currently, the likelihood of the Bank of Japan raising interest rates is very high. This is particularly significant because, in recent times, a large amount of capital has flowed into Bitcoin and the cryptocurrency market from cheap Japanese yen sources. When interest rates in Japan increase, this capital flow is likely to gradually withdraw from risky assets, including cryptocurrencies. In this context, the top priority is no longer high profits, but safety. Early signs of an economic crisis are gradually emerging, and now is not the time to risk on technology or AI stocks – sectors that often face significant pressure when global capital flows reverse. A reasonable strategy at this stage is to hold a higher cash ratio or allocate into short-term government bonds to preserve capital. Simultaneously, investors may consider stocks in essential consumer goods and fast-moving consumer goods. Whether the economy is in recession or not, people still need to go about their daily lives: washing their face, bathing, shampooing, eating, drinking water, and even drinking a familiar soda can. These needs almost do not change with economic cycles. With careful observation, we can see that foreign investors have long recognized this. They continuously expand and control businesses in the essential and consumer goods sectors within the domestic market. When entering supermarkets today, most familiar brands bear the marks of foreign capital behind them. The strength of these companies is their ability to “go through the cycle.” When monetary policy loosens, they can raise prices. When monetary policy tightens, they still maintain stable prices, ensuring steady and healthy cash flow. In uncertain times, strong growth is not always the wisest choice. Sometimes, the greatest victory for investors is preserving capital and patiently waiting for clearer opportunities in the future.