Posted inDACHEmerging MarketsEquitiesEuropeJapan

Swiss jump on European QE wave

The Swiss are among the last to buy into the momentum for European equities created by the European Central Bank’s stimulatory measures in the beginning of the year. A year ago, buyers and sellers were almost in balance, but that seems a long time since now. Some six in 10 Swiss fund selectors are now looking to increase their allocation to European equities.

 

 

This picture is underpinned by recent fund flows in Switzerland: the Swiss added almost CHF2bn (€1.8bn) to European equity funds in the three months to the end of August, according to figures published by the Swiss Funds & Asset Management Association (SFAMA).

Genuine optimism

During the market correction in late August, some interviewees decreased their allocation tactically though. Over the month, they pulled out CHF305m from equity funds overall. But the longer term picture still looks constructive, they think. This belief is underpinned by an improving macroeconomic picture, and faith in the positive effects of further QE on equity markets in the short term. While fund selectors in many European countries admit they are increasing their allocation to European equities because they consider it the least bad option for the moment, this is not the case in Switzerland: here, investors are genuinely optimistic about the asset class. Financials and peripheral Europe are especially seen as compelling investments.

Question marks around Japan

While they feel QE is working in Europe, the Swiss are not quite so sure whether it does in Japan. A year ago, Japanese equities were the most popular asset class with Zurich’s fund buyers. Enthusiasm has now cooled down quite significantly, with only half as many buyers remaining as back then. Still, the Swiss are more enthusiastic about the asset class than most of their European peers.

 

Part of the Bonhill Group.