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Correction an opportunity to rebuild positions: UBS
UBS equity strategist Richard Shellbach says investors should be using the current correction in equity markets to buy in preparation for a resumption of the bull market.

"Central banks are normalizing monetary policy and they are normalising their balance sheets, so it follows that equity market valuations will also normalise," he says.

"This current market correction will help shake out a lot of leverage which has built up in equity markets over recent years.

"Yes, it's unnerving, but this is a healthy and normal function of markets: it also gives investors an opportunity to rebuild into positions for the next upswing."

Based on his calculations, the 12-month forward PE multiple of the S&P/ASX 200 will have fallen back to about 16.6 times versus 18 times at the start of the year.

He notes that the valuation impacts of the correction have hit the most "stretched" sectors including Tech and Healthcare, while banks and insurers have have held up better.

Equally strong has been the rotation within styles, with value outperforming growth by around 4% this month.

But a "value fightback" could prove "underwhelming" at this stage.

"It may however be too early to fire the starting gun on value's much anticipated fightback," he says.

"On a standalone basis the basket of value stocks on the ASX has also de-rated, but just less so than what growth suffered."