Credit Suisse Turns Overweight on Global Stocks as Others Reduce

(Bloomberg) -- Credit Suisse Group AG’s wealth management arm has raised global equities to overweight from neutral, even as other firms are reducing holdings amid economic growth concerns.

Renewed prospects of a U.S.-China trade deal, diminishing political risk in Italy and the U.K., and additional stimulus measures by central banks globally suggests equity markets will benefit, Credit Suisse’s Global Chief Investment Officer Michael Strobaek said in an investment note.

Credit Suisse’s change in stance comes after the wealth management units of UBS Group AG and Deutsche Bank AG reduced equity positions, citing trade war and political risks to global growth. The European Central Bank yesterday cut interest rates further below zero and revived bond purchases, while the U.S. Federal Reserve is likely to lower borrowing costs next week for the second time this year.

Credit Suisse raised its funds’ weightings for developed market equities above strategic allocations after two months, with a preference for U.S. equities and global financial stocks. Strobaek said the 5.5% earnings yield of S&P 500 stocks versus bonds is appealing, while noting the real yield of 10-year Treasury bonds recently tumbled to almost zero.

“For now, we believe equities have sufficient tailwind to climb further,” Strobaek said. “We will continue to monitor developments very carefully and adjust our views as necessary.“

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