Japanese equities have rallied, according to some yardsticks, by more than 50 per cent over the past six months – a period coinciding with the election of the pre-reflation administration of Shinzo Abe. (However, Japanese stocks have suffered a sharp correction in recent days.)

“It may be years before we can fully judge any long-term success of Abenomics, but over our tactical investment horizon we believe the combined actions of the government and BOJ position and by adopting an underweight position in Australian equities, which could suffer from any further slowdown in China,” he said. Friedman explained that UBS has decided to lock in some profits made on US high-yield debt.

“We expect the US economy to help deliver solid revenue growth for US companies, while the improving housing market should prop up domestic demand and the outlook for financials. In terms of valuation, despite a 16 per cent run this year, we believe there is approximately 6 per cent upside in the coming six months, and just under 20 per cent upside to fair value on a cyclically adjusted earnings yield basis, given current trends in inflation and real interest rates,” he said.

Among other positions, UBS Wealth Management is overweight the US dollar, while the Australian dollar – once a darling of currency investors – is the least preferred currency of the Swiss bank. A month ago, UBS took an overweight stance on the US dollar against the Swiss franc and continues to be bearish on the euro.