Investment Strategies

Pictet Asset Management Turns Sour On Global Stocks

Tom Burroughes Group Editor Singapore 7 June 2013

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Pictet Asset Management has turned bearish on global equities – although it remains quite upbeat about Japanese stocks – concerned that markets are likely to become more challenging, especially if or when the US Federal Reserve begins to wind down monetary easing.

In a report entitled Time To Turn More Cautious, Luca Paolini, chief strategist at the firm, explains why the asset manager is pulling in its horns.

“We believe global equity markets are about to enter a more challenging phase, and are therefore downgrading stocks to underweight from neutral,” Paolini says.

“Another dark cloud on the horizon for the global economy is the growing possibility that the Fed’s asset purchase programme – currently running at $85 billion per month – might soon begin to taper off. Although we continue to believe that growth is too weak for the Fed to rein in liquidity at this stage, it remains a risk nevertheless. One bright spot in our business cycle readings, however, has been the sharp decline in inflation in all regions. This has supported consumer spending power and has expanded the room to manoeuvre for central banks,” he says.

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