The wealth management firm has set out its asset allocation positions, arguing that investors appear to have already priced in a “worst-case” Gulf clash scenario, with investor behaviour, AI and earnings providing a measure of reassurance.
Apricus
Finance, an external asset manager, says it is holding to a
neutral position on equities, and holds between 9 to 12 per cent
of its portfolio in cash and cash equivalents because of economic
uncertainties.
The firm said it is, within its overall equities position, taking
an overweight eurozone and Asian ex Japan position versus the US
excluding the “mega caps” area.
Turning to bonds, Apricus said it continues to favour credit
versus duration exposure (or interest rate sensitivity). The firm
has, however, increased the quality of its holdings by raising
exposure to investment-grade credit, European high yield, hybrids
and financials’ subordinated debt.
Apricus said it is keeping its gold allocation at about 3 per
cent; the wealth manager is also overweight commodities as a
whole. Shifting to currencies, the firm said non-US
dollar-referenced portfolios are fully hedged against the dollar
and yen.
Investors appear to have priced in the “worst-case” scenario in
response to the US/Israel military clash with Iran and
expect US President Donald Trump to seek an exit strategy,
Apricus said, setting out its views. It expects US earnings to
rise about 12 per cent. AI is also back as a positive force
in the market, as announcements of rising spending and joint
ventures come through, reassuring investors about the theme.
There is also, Apricus said, a return of a “dip-buying mentality”
as investors profit from buying selloffs amidst volatile
conditions.
Reflecting on the energy crisis stemming from the Gulf conflict
and the fallout, Apricus said inflation is likely to stay “higher
for longer, particularly in the US.”
“Growth will also be impacted. A couple of quarters of lower
growth with a brighter outlook will not derail the equity market.
But sustained lower growth will. It will also determine the path
for central banks. So, the central question is whether the shock
is short term, with a quick resolution in sight, medium term with
some stagflation for a few quarters, or whether the situation
doesn’t improve that quickly and the world economy tethers on the
brink of recession with stubborn inflation, (worst case
scenario),” it said.
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