Pictet Asset Management is neutral about equities and prefers to look for an opportunity to snap up stocks later in 2013 while it waits to see what will be the impact of any slowdown, or “taper”, in the US Federal Reserve’s massive monetary stimulus of recent years.
As with other wealth management houses trying to work out the effect of any central bank halt to quantitative easing, PAM expects there to be some negative effects, at least in the short run.
“We prefer to wait for a buying opportunity later this year, which we believe could emerge after the Fed begins scaling back quantitative easing; another pre-condition for being overweight stocks is a recovery in emerging economies,” Luca Paolini, chief strategist, Pictet Asset Management, said in a note.
“At the same time, we upgrade government bonds to neutral from underweight, funded by a scaling back of our cash position. We have also raised our stance on oil to overweight - stronger economic growth, supply disruptions in Nigeria, Libya and Iraq and renewed tensions in the Middle East should push oil prices higher. We also retain our preference for the dollar as the US economy continues to outgrow its peers and the Fed edges closer to withdrawing monetary stimulus,” he said.