The world is counting down to the United States presidential election on Nov 8, an event that could cause market turbulence in the near term while raising questions about the future of global trade.
Analysts expect regional markets to reflect volatility on Wall Street in coming weeks, so investors should tread carefully even if opportunities for bargain-hunting turn up.
One reason for caution is that US presidential elections have traditionally been preceded by sell-offs. In 2012, for instance, the Dow Jones Industrial Average dropped by around 6 per cent in the month leading up to the vote on Nov 6.
"Historically, US equity indexes tend to be volatile during presidential election years when the incumbent is not seeking re-election," DBS analysts Janice Chua and Yeo Kee Yan said in a recent note.
"Given the high correlation of global equity markets with the US', investors are likely to stay on the sidelines in the run-up."
Both the S&P 500 and Dow Jones Industrial Average have been range-bound in the past 30 days - a sure sign of jitters building up. Both indexes have been down around 1.3 per cent over the period.
Against this backdrop, DBS has forecast that the Straits Times Index (STI) will trade between 2,750 and 2,950 points for the remainder of the year. The benchmark closed at 2,875.24 last Friday.
What complicates matters is that Republican candidate Donald Trump has stirred worries within and beyond the US with his controversial policy stances on immigration and trade.
While Democratic candidate Hillary Clinton has been viewed by many as being more appropriate for the job, the markets might be unprepared for a nasty surprise, said CMC Markets analyst Margaret Yang.
"Right now, she is ahead in opinion polls, so equity markets have not fully priced in a victory by Mr Trump. But seeing how Brexit ended despite opinion polls, I wouldn't completely rule out his winning, which would be a huge market shock and lead to panic selling," Ms Yang told The Straits Times.
"One way to hedge against the risks is to get some gold and Japanese yen positions. Both are popular safe-haven assets and sought after during 'bad times'. The key is having a balanced portfolio.
"As for shares, the local market is one of Asia's cheapest and downside is limited, so there are opportunities for long-term investment.
"But now is not the right time to buy. Perhaps wait until the second or third day after the election when markets hit bottom and rebound, as they did after Brexit."
Yield plays such as Keppel Reit (real estate investment trust), Ascendas Reit and Frasers Logistics & Industrial Trust are good buys amid the volatility, DBS noted, while ComfortDelGro and Sheng Siong are also worth a look.
Bank of Singapore has retained its neutral stance on Asia-Pacific equities, while advising investors to get exposure to high-quality bonds with shorter maturities to avoid interest rate risks.
Even so, the bank's chief economist, Mr Richard Jerram, sees no reason to be overly bullish, as aftershocks from the election might be worse than just near- term market disruptions.
"With Clinton, we can expect a large degree of policy continuation. But if Trump wins, it will be a totally different game," said Mr Jerram.
"Compared with domestic affairs, the US president has more power in directing foreign and trade policies. If Trump implements the 45 per cent tariff on Chinese exports that he pledged, the move could crash global trade because the whole Asia-Pacific supply chain would be affected. The worst-case scenario is that he throws the global economy into recession.
"As for the Trans-Pacific Partnership, you can be sure there's no chance he would let it pass. In fact, it's as good as dead even if Clinton wins - the deal is unlikely to get past the US Congress."
A Trump administration might also create complications for Federal Reserve policies, noted ABN Amro chief economist Han de Jong.
"It is not only Trump himself, but also others in his camp who have come out to claim that the Fed is essentially a supporter of the Democrats… This raises a risk to Fed independence should Trump become president, not something financial markets should like," said Mr de Jong.