Pictet Asset Management has revised its strategy in light of recent macro economic events and has shown a preference for Japanese and European stocks in particular.
According to Luca Paolini, chief strategist at the firm, recent events in China, including its slowdown, have lead to the region being downgraded.
“Stocks in the Pacific ex-Japan region are cut to underweight as Asia’s export hubs are being negatively affected by China’s slowdown,” he says.
However, he goes on to say that with the Greece situation looking better as the country and its creditors progress towards a new bailout deal, the region is attractive enough to go overweight in.
With debt-laden countries such as Italy and Spain recovering, this is making up for what Paolini describes as an “economic weakness” in Germany.
The result of this recovery is an improvement in corporate earnings in the Eurozone, which are expected to grow by 7.7%. However, Paolini says his firm’s model projects that this could grow by a greater click.
Overall, the firm believes that the European Central Bank’s policy of quantitative easing is working, as there has been an increase in bank loans to corporates – up by 1% over the quarter.
©2015 funds europe
