Despite the risk of impeachment, the trade war and other disputes, 70 percent of Swiss asset managers expect U.S. President Donald Trump to be re-elected, and expectations for the stock market are correspondingly positive.
The opinions are obviously made: A good 70 percent of Swiss asset managers expect US President Donald Trump to be re-elected next year. In contrast, only 20 percent of respondents expect the Democratic Party to win (see chart).
This is according to the latest Aquila Asset Managers Index (AVI), published by the Swiss Aquila Group every three months in cooperation with finews.ch published. The index summarizes various forecasts from independent asset managers in Switzerland. Almost 160 firms took part in the latest survey.
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Another four-year term for Donald Trump is likely to have a positive effect on the stock market. At least, that is the assumption of the survey participants. They expect interest rates in the USA to fall further, which in turn would have an impact on interest rates in the euro zone and Switzerland.
Against this backdrop, it comes as no surprise that Swiss asset managers expect stock market prices to rise significantly over the next three months (53 percent of respondents in the SMI, 43 percent in the EuroStoxx50 and 47 percent in the S&P500) (cf. graphic).
The positive expectations generally make asset managers optimistic. A total of 44 percent of survey participants expect business to develop positively or even very positively over the next twelve months; 43 percent anticipate stable development. And based on these premises, one third of the asset managers surveyed intend to hire additional staff, as the current survey further reveals (cf. graphic).
A look back also shows that the first nine months of 2019 have left a positive mark on the books of independent asset managers. Rising prices between January and the end of September not only led to an increase in assets under management for 57 percent of respondents, but also to a significant increase in new money for 31 percent of survey participants. Good market performance was also important to growth for 37 percent of asset managers (cf. graphic).
In three months, Swiss asset managers see the SMI at an average of 10,017 (in the previous quarter: 9,693), gold at a price of just over 1,538 (in the previous quarter: 1,392) dollars an ounce and the euro at 1.08 (in the previous quarter: 1.11) francs.
The next AVI Index will be published in January 2020
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Independent asset managers in Switzerland are currently facing a difficult market situation. Many assets are proudly valued after the bull market in the current year, while at the same time the geopolitical fragmentation of the world does not make it easy to make the right investment decisions, as the latest edition of the AVI Index shows.
Independent asset managers in Switzerland are unanimous: local banks are threatened by overregulation, the US economy is overestimated on the stock market, and now is a good time to dry up profits.
In Switzerland, consumption remains the mainstay of the economy, while foreign trade is slowing growth. Inflation is close to zero.
Germany has probably overcome the recession and moderate growth of 1.3-1.4% is expected for the coming years. The EU-US trade agreement further improves the outlook.
In the USA, the figures are contradictory and a shutdown is looming.
The SNB and ECB are keeping their key interest rates unchanged at 0% and 2.0-2.4% respectively. Forecasts point to a slight rise in inflation.
The Fed is continuing its cycle of interest rate cuts due to weaker labor market data and probably also political pressure. Further interest rate cuts are expected.
The mood on the global bond markets is calm and yields are barely moving.
The most important stock markets remain close to their highs as market breadth declines. Individual technology stocks are coming under pressure.
The decline of the US dollar has been interrupted, but further weakness could follow in the medium term.
Gold reflects the loss of confidence in the US dollar.
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