Investment Strategies

INVESTMENT COMMENT: Pictet Asset Management Is Neutral On Stocks, Ponders Fed Action

Tom Burroughes Group Editor 5 September 2013

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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.

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