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UBS, Credit Suisse diverge on advice for wealthy clients

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UBS and Credit Suisse are offering diverging advice to their wealthy clients on how to trade through the worst stock market shock in more than a decade.

The recent selloff presents an opportunity for investors to build up long-term portfolio allocations in areas such as health technology, Mark Haefele, UBS’s chief investment officer for wealth management, wrote in a note Wednesday. Credit Suisse Chief Investment Officer Michael Strobaek offered a more cautious assessment: It’s too early to call a trough in stocks.

The market crash is leaving the firms’ wealthy clients with a dilemma. Both UBS and Credit Suisse, along with other wealth managers, had been trying to get them to invest more and reduce cash holdings by passing on negative interest rates to large depositors. Now customers face the choice of staying invested and risking more losses, or going into cash and paying for it.

Haefele advised against panic selling in a falling market, and said clients who use leverage should make sure they have adequate capital buffers to avoid having to sell assets. Both banks said diversification across asset classes was the best hedge in the current situation.

UBS recommended emerging market stocks over developed markets, in part because of China’s “relative success in containing the virus.” Options strategies, dividend stocks and high-yield bonds may also provide long-term value, while the dollar is poised to decline further against the euro. Risk-averse investors should consider longer-duration U.S. Treasuries, especially inflation-protected, and gold, Haefele wrote.

Strobaek told investors to be wary of “taking sides” and trying to time the markets. Equities should regain ground if confidence is restored over the next three to six months, he said.

“Very high volatility in equities will persist in the coming weeks as the viral outbreak accelerates outside of China and policymakers race to find a concerted response to get ahead of the curve in markets,” he wrote in a note to clients late Monday.

Bloomberg News