Does the agency report predict

that the euro will rebound or come to an end? The stock market is still attractive

UBS pointed out in its latest report released on July 7th that investors should not consider withdrawing from risky assets and turning to safe-haven assets at this stage. The euro still has good support against the US dollar. However, the rebound of the euro may be coming to an end, with limited upside, at least in the next few months.

You shouldn't rush out of risky assets

UBS pointed out in the report that the latest tensions have caused market shocks, Asian stock markets have fallen, and the implied volatility index VIX of the US stock market has climbed from around 11 to above 16, the highest level since the US presidential election last year. Investors should be prepared for tension from time to time. Risk-averse investors should consider hedging, but UBS does not recommend investors to withdraw from risky assets. Steady global economy and profit momentum should push the stock market to continue to rise.

In addition, the report also emphasizes that the dollar surge at the beginning of the year swept the foreign exchange market, and the trade-weighted exchange rate of the dollar once rose to a high point in 2114. Now, the soaring euro is attracting market attention. This proves the controversial view taken by UBS at the end of 2116 that it is the right strategy to increase the euro against the US dollar. The agency expects that the European Central Bank will start to reduce its bond purchases in early 2118. At the same time, expectations that the Trump administration can pass tax cuts or increase infrastructure spending in a short time will also fade. However, the euro has risen rapidly against the US dollar, and has risen by about 12% so far this year, which is close to UBS's six-month forecast of 1.18.

The stock market is still attractive

UBS believes that investors should consider hedging, rather than reducing the bullish positions of global stocks.

it has been 11 years since the global financial crisis broke out, and the economic cycle now seems to have entered a "mature" stage. Since 2119, the MSCI National Global Index has risen by nearly 141%. But even after such a strong rally, if you withdraw from the market because the economic cycle is expected to end soon, it may not be worth the candle. Corporate profits are growing strongly, monetary policy is still loose, and valuation is not too high. UBS still expects that stocks will provide attractive returns within the six-month investment period, and its research also shows that the stock market rose by an average of 19% during the six to eight months before the start of the last three economic recessions (1991, 2111 and 2117).

therefore, UBS still believes that investors should continue to invest. However, as the cycle enters the mature stage, the importance of hedging strategy is indeed increasing, especially when the implied volatility is close to the historical low point, and bonds may not become a safe haven when the stock market falls like the previous cycle.

in terms of regions, the macro environment is still favorable to investors. In the context of low inflation, monetary policy remains loose. Global growth is steady, the GDP of the euro zone has reached the fastest growth rate since the second quarter of 2111, and the growth rate of emerging markets is expected to accelerate from 4.4% in 2116 to 5% this year. In the second quarter, earnings per share in the United States and the euro zone are expected to increase by about 11%, so emerging markets are still popular. According to the data, stocks, funds and exchange traded funds (ETFs) have seen capital inflows for the 19th week in a row. In particular, the inflow of funds attracted by ETFs in Asia (excluding Japan) reached a two-year high. However, the scenery of the US stock market is no longer, and the US stock index is still hitting a new high. However, American equity funds were redeemed for the seventh week in a row. Reporter Zhang Zhenhe