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UBS Securities Research initiate strategic outlook for 2012
London, 14 November 2011 – UBS Securities Research expects investment outlook for 2012 to remain distressingly familiar to 2011, with outcomes dominated by uncertainty surrounding the Eurozone crisis and doubts about the sustainability of the global economic recovery.
UBS Securities Research expects:
- The Eurozone to double dip into recession in the first half of 2012, while the US economy will remain relatively insulated from European economic weakness.
- The prospects for global recovery could be boosted by receding inflationary pressures in emerging economies, which could remove headwinds and allow policy easing in 2012.
- Emerging market economies are also anticipated to benefit from strong relative outperformance, despite a slow down in growth in early 2012.
Weak growth, particularly in the Eurozone and uncertainty over monetary, fiscal and exchange rate policies will keep currency markets super volatile in 2012. Investors should focus on three key themes to navigate choppy markets; strong dollar, Swiss National Bank and the Bank of Japan and strong sovereigns.
From an asset allocation perspective, UBS Securities Research remains cautious about the near term outlook and suggests investors focus on income generating corporate assets, including high yield credit and stock dividends. Conversely, low yields make nominal and inflation linked bonds and cash unattractive. From an equity strategy viewpoint, UBS advocates defensive positioning with a focus on quality and yield as a way to weather volatile markets.
The Securities Research equity strategists favour US and GEM equities, estimating 13 percent upside for GEM equities in 2012. Positioning for 2012, UBS are overweight on Tech, Consumer Staples and Healthcare and underweight Financials, Consumer on Discretionary, and Utilities. Currency markets will continue to remain super volatile in 2012 and investors should focus on 3 underlying themes to navigate
NOTES TO EDITORS:
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