Bank Sarasin is poised to boost exposure to BRIC equities – Brazil, Russia, India and China – as they are seen as benefiting from a livelier economic outlook and are cheap compared with industrialised nations’ stocks.

In an update to investors about its asset allocation views, the firm argued that with emerging market stocks trading at a 20 per cent discount to industrialised countries’ equities, they are good value; the discount is not justified by the growth prospects of emerging markets, Bank Sarasin said.

The bank commented as investors and pundits have sought to work out the implications of last week’s re-election of US president Barack Obama and the power changes in the leadership of China’s ruling Communist Party. The Asian giant is about to reveal its new leadership lineup.

“The BRIC nations offer the greatest upside potential for investors as they will profit most from capital inflows to risky assets. The change in China’s leadership will see an increase in spending on infrastructure programmes in the coming quarters, and that will drive growth momentum in Asia,” said Phillip Baerschi, chairman of the investment committee at Bank Sarasin.

As a result of its expectations, the Swiss firm is gradually moving into more cyclical stocks from defensive companies to exploit the brighter outlook, it said. It has also upgraded its stance on industrials stocks to “overweight” and cut defensive and expensive consumer staples to “neutral”.