Investors should be overweight on stocks and commodities as global economic growth is set to pick up, according to Credit Suisse Private Banking.
"We have been through a phase of slightly slower data coming out of the world economy, coming out of China and that phase I think is moving towards being replaced by a reacceleration [in economic growth]," Credit Suisse Private Banking global head of research for private banking Giles Keating said in Sydney yesterday.
"We maintain our overweight strategic stance for the next six to 12 months on equities, commodities and real estate, based on our view that the two-year-old global upswing can continue for at least another two years."
Credit Suisse Private Banking recommended that investors gain exposure to stocks that would benefit from high commodity prices and the global recovery, such as technology companies.
Keating said the main driver of recent market volatility had been concerns over the slowdown in China and global economic growth, oil price fluctuations and European sovereign debt issues.
However, the large levels of cash on corporate balance sheets, low interest rates and the increasing spending power of emerging market consumers were reasons global economic growth would stay robust, he said.
"These slowdowns are to be regarded as a normal part of the cycle ... and again if you look back to previous economic cycles, it's absolutely normal that one year into the upswing you get a few rather softer months," he said.
"And again at about two years in the upswing you get another few rather softer months and it doesn't last that long and it certainly doesn't push you anywhere near back into negative growth.
"But it means a slightly slower growth for a little before things then reaccelerate again."
He said the economic upswing should be accompanied by a renewed uptrend in equities, commodities and real estate and a weakening of bond markets.
