Credit Suisse Says ‘Animal Spirits’ Are Back Among InvestorsBy
Uncertainties that weighed on client activity have receded
‘We are fully invested’ in portfolios with no cash overweight
Credit Suisse Group AG is seeing a greater willingness among clients to put their cash to work after economic and political uncertainties eased.
“Animal spirits seem to be back in both the real world and the financial world,” Nannette Hechler-Fayd’herbe, the bank’s director of investment strategy and research, told journalists in Zurich on Wednesday. “We are fully invested in our portfolios” and “have no overweight in cash, in contrast to last year.’’
Emmanuel Macron election victory over Marine Le Pen, who campaigned on promises to lead France out of the euro currency region, removed one of the biggest worries among investors, Hechler-Fayd’herbe said. Global trade has returned to a growth path despite protectionist sentiment in the U.S. and elsewhere, said Global Chief Investment Officer Michael Strobaek.
Credit Suisse is in the second year of reshaping its business model to expand in wealth management, which has steadier revenues and requires less capital than volatile trading operations. Muted client activity has frustrated the strategy, with the very wealthy preferring to hold cash rather than invest because of uncertainty over the direction of markets.
The rebound in client activity is particularly strong in Asia, where a recovery in private investment is helping to offset weaker public outlays, Strobaek said. The MSCI Asia-Pacific Index has climbed 13 percent this year and the Hang Seng Composite Index was up almost 17 percent through Wednesday.
Despite a good earnings season, Credit Suisse continues to see equities as overvalued, Strobaek said. The bank recommends health, energy and real estate stocks because of their relatively high dividends and prefers companies in Switzerland, the euro zone and Canada.
In credit markets, Credit Suisse recommends high-quality corporate bonds and is overweight on bank debt. In commodities, it prefers energy and is underweight on gold.
Credit Suisse predicts the dollar will strengthen against the Swiss franc and the euro, supported by U.S. interest rate increases.