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Credit Suisse: It's time to hedge against growing risks
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Loading...Stock markets may still be rallying, but now is the time to find "insurance" for their portfolios amid growing geopolitical risks, said Robert Parker, senior advisor on investment strategy at Credit Suisse, on Monday.
"Taking a two-to-three year view, the outlook for global equity markets is reasonably good," Parker said at a market outlook presentation for private banking clients. "Taking a two-to-three months view, I think we've got to be cognizant of the risks, whether it's European political risk, whether it's disappointment with Trump not delivering on his promises. We also shouldn't forget geopolitical risk in the Asian region," he said.
Parker pointed to another reason investors should feel a little bit antsy about markets.
"We are seeing quite an interesting trend over the last two weeks, and this trend is particularly the case in the American equity market, which is that retail investors are continuing to put money into equities, institutional investors are pulling money out of equities," he said.
"Don't be surprised by a correction," he said.
Credit Suisse recommended several hedges to insure against rising risks. Parker noted that buying the Vix, or fear index, was probably the most effective hedge.
Buying the yen was also recommended as Japanese investors tend to repatriate funds amid bouts of risk aversion.
But Heng noted that one other usual risk hedge, gold, wasn't working out well currently.
"Everybody wants to own gold as a hedge against risk aversion that is perfectly correct but it's not working out at all because the U.S. dollar is rising. So as a good hedge against risk aversion, I would say own gold in euro terms," he said, noting rising political risks on the continent with multiple elections in coming months.
CNBC
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