With more than $2.48 trillion AUM, UBS Global Wealth Management is one of the world's largest asset managers. And now, for the first time since the financial crisis, the Swiss bank has dropped its rating on equities to 'underweight' as it braces for a recession spurred by a worsening trade war and slowing economic growth in Europe, Bloomberg reports.
The Swiss asset manager cut its equity positioning relative to investment-grade bonds, said Global Chief Investment Officer Mark Haefele, to reduce its exposure to all of the factors mentioned above.
More specifically, the change incorporates a new underweight position in emerging-market stocks.
"Risks to the global economy and markets have increased, following a renewed escalation in U.S.-China trade tensions," Haefele said.
UBS had resisted turning outright bearish on stocks, even as the the trade war between the world's two largest economies intensified, leading up to President Trump on Friday declaring his plans to raise tariffs on $250 billion of Chinese goods to 30% from 25%.
"With talks between the US and China dominating market moves over the near term, investors should brace for higher volatility," Haefele said.
"We believe it is prudent to take action to neutralize part of this event risk."
Additionally, UBS has been recommending clients go long gold for months now, and lately, it raised its price target on the precious metal to $1,600/oz, per BBG.
Haefele reiterated that emerging-market stocks are the most vulnerable because they are "the most exposed to heightened market volatility."