UBS Global Wealth Management, the world largest wealth management firm, has turned bearish on stocks for the first time since the financial crisis, according to a note by its top investment officer.
The Swiss asset manager recommended that clients sell stocks due to concerns that the latest escalation of the ongoing trade war between the U.S. and China could threaten global markets
“Risks to the global economy and markets have increased, following a renewed escalation in U.S.-China trade tensions,” UBS Global Chief Investment Officer Mark Haefele wrote in a note to investors.
“The U.S.-China trade dispute has escalated in recent days, raising the risk of a cycle of retaliation that undermines global growth and equity markets. That justifies a reduction in risk in our portfolios in order to lower our exposure to an uncertain political environment.”
The two largest world economies have engaged in a trade war with the U.S. imposing a 25-percent tariff on $250 billion worth of Chinese goods since 2018. China retaliated by taxing billions of dollars of U.S. products.
UBS resisted the urge to turn bearish on stocks but the last straw came with an announcement by President Donald Trump on Aug. 30. His administration said it would increase tariffs on $250 billion worth of Chinese goods from 25 percent to 30 percent.
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In recent months, tensions between the two countries have gone beyond trade into technology and security. The U.S. has blacklisted Huawei, making it more difficult for the Chinese tech giant to do business with U.S. companies.
Haefele added that emerging-market stocks were “more exposed to heightened market volatility, a slowing global economy, and heightened trade tensions.”
