Credit Suisse advises clients to take a pause from investing in stocks and review portfolio
Credit Suisse, the world’s sixth-largest wealth manager, is advising clients to take a pause from investing in stocks.
“We think that now is a good time to review equity portfolios, lock in some gains and protect investments,” Nannette Hechler-Fayd’herbe, the bank’s director of investment strategy and research, said in Zurich yesterday, adding that she isn’t telling clients to sell.
“Generally it’s hard to predict political risks – we don’t know what it’s going to be.”
Credit Suisse’s recommendation to wealthy investors to consider portfolio allocations came ahead of a slide in stocks on Friday triggered by mounting concerns about US policy and after terrorists struck a crowded tourist street in Barcelona, killing 13 people. The worries are worsening the mood for traders after last week’s escalation of tensions on the Korean peninsula.
Credit Suisse is keeping a neutral stance on equities but voicing some concerns over its valuations: stocks should continue to rise, the bank said in a separate investment letter, but “valuations seem full.”
Low volatility could present an opportunity for investors to protect realised gains making use of option strategies, it said. Volatility indices spiked recently but are still bouncing around historically low levels.
The CBOE Volatility index – a key measure of US market volatility – stood at around 10 for most of the year, while the long-term average of the index is closer to 20.
Credit Suisse, along with other rivals including UBS and Julius Baer, is struggling with muted client activity as the very wealthy hold more cash than was traditionally the case, amid fears that valuations across asset classes remain stretched.
“What I see for instance is that clients are ready for rotation,” Mr Hechler-Fayd’herbe said, citing a move with equities from broader indices to longer-term investment themes such as clean energy.