Michael Strobaek: "Global growth is on track"
It has not been a quiet first half for financial markets, with Italy the latest area of concern to cause disruption.
Although political and geopolitical events have repeatedly dented sentiment this year, we remain confident in our balanced, but risk-on positioning. The political situation in Italy has cleared slightly, and global economic reacceleration is underway, as indicated by leading indicators.
In our recent Investment Committee meeting, we therefore confirmed our positive view on equities and commodities, two asset classes that should benefit from the global growth reacceleration underway.
Prefer EUR, JPY and EM currencies
Central banks are continuing to remove stimulus, and the recently more hawkish European Central Bank should underpin the EUR, which we still favor alongside the JPY and emerging market (EM) currencies. In fixed income, we prefer EM bonds in both hard and local currency as well as convertibles, but remain cautious on government bonds.
Swiss Equities - Attractive Valuations
In equities, we prefer EM, UK and Swiss equities. We add back the latter to our regional focus, as valuations have become very attractive in an international comparison. Technology, financials and energy remain our preferred sectors, while we close our telecom outperform view despite its attractive valuations, as the outlook just is too disparate for the sector across the USA, Europe and Japan. We downgrade utilities to underperform.
The Importance of Long-Term Investments
In our view, the events and volatility spikes this year show the importance of including long-term investments in one's portfolio. We have just published an update on the Supertrends, our five high-conviction investment themes that are an integral part of the Credit Suisse House View. Since we launched the Supertrends in May last year, we have seen these long-term themes deliver a very satisfying performance, and each individual theme remains highly relevant.