THE exuberance experienced across Asia at the start of second-half trading last week is likely to evaporate, as traders react to the dour jobs data tossed up by the United States on Friday.

Even before the release of the widely awaited US jobs data, most Asian markets were already in the retreat, despite further monetary easing efforts one day earlier by some of the world's biggest central banks to arrest the growing gloom.

As it turned out, traders were right to be wary. Even though US economists had pared their estimates for US job creation in June to a mere 90,000, it was still higher than the figure of 80,000 that was finally released.

It led many to wonder if the US recovery - as exemplified by the strong job growth in the first few months this year - may be taking a turn for the worse. And this spells trouble for the export-led economies in Asia which counts the US as the major market for their goods.

Worse, investors cannot even rely on China to pick up the slack. With the unexpected cut in interest rates by the People's Bank of China last Thursday, its second in a month, the fear is that the slowdown in the mainland manufacturing sector may be worse than expected.

Then there is the perennial sovereign debt problem in the euro zone that refuses to go away, despite repeated attempts by European leaders to fix it.

Even the European Central Bank's cutting of interest rates last week failed to steady the wobble in Europe.

Instead, Spain's benchmark borrowing interest rate again inched close to bailout territory of 7 per cent on Friday, as investors flagged their unease over Europe's move to channel money directly into ailing Spanish banks.

Against this backdrop of uncertainties, it is not surprising that major lenders OCBC Bank and United Overseas Bank raised huge sums last week to bolster their capital base, in moves reminiscent of their previous major fund-raising exercises in mid-2008, just before the collapse of investment bank Lehman Brothers.

As a result, brokerages are advising investors to trade in and out of the market, as it switches between 'risk-on' and 'risk-off' modes. They also anticipate that the slowdown in China will trigger a downgrade in Singapore's second-half gross domestic product forecast.

The 'smart money' appears to be adopting a similar trading strategy. Citi Investment Research data showed that foreigners had turned into net buyers across all Asian markets.

'This marked the first week of broad purchases by foreigners since late March. According to exchange data, all six emerging Asian equity markets - India, Indonesia, South Korea, the Philippines, Taiwan and Thailand - saw net buying by foreigners,' said Citi's strategist Markus Rosgen.

For brokerage UOB Kay Hian, the advice to investors is to go on the defensive. 'Our strategy would be to go for a combination of stocks with high dividend yields such as Suntec Reit and buy selectively on market dips, particularly on stocks trading at exceptionally low valuations such as Overseas Union Enterprise and Olam International,' it said.

Nomura Equity Research's Lim Jit Soon noted that the weaker external demand, coupled with a restructuring of the economy, is likely to constrain any upside in the market for the second half. 'Stay defensive, but look for opportunity to improve returns through stock picking,' he said.

He suggested buying into real estate investment trusts (Reits) whose spread in yield over long-term bonds has widened recently. Office Reits such as Suntec and CapitaCommercial Trust offer yields of 7 per cent and 5.8 per cent respectively.

There may also be value in developers such as UOL, whose projects are largely sold, giving them the opportunity to accumulate land at reasonable prices if there is a market correction.