Bank sees ‘a lot’ of money flowing into European stock markets and expects equities to extend this year’s gains.
With many investors facing losses from Swiss franc deposits and government bonds, Safra Sarasin Holding is bullish on European stocks.
Safra Sarasin Holding AG, the private bank controlled by Joseph Safra and family, is advising clients to buy shares in European companies as investors face losses holding Swiss government bonds and deposits in the country’s currency.
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“People want to avoid losses, ” Karsten Junius, Safra Sarasin’s chief economist, said in an interview in Geneva. “A sure loss from investing in Swiss bonds is a nightmare for a lot of them. They worked so hard for their money and they would lose it to banks or the Swiss state.”
Safra Sarasin managed 131 billion francs ($142 billion) for clients at the end of 2013, according to its last annual report.
Investors seeking a haven have driven yields on Swiss government bonds with a maturity of as long as 10 years to below zero. Banks, including Safra Sarasin, have levied charges on cash accounts after the Swiss central bank increased the cost of holding francs on deposit after its January decision to remove its currency cap against the euro sent the franc soaring.
Junius said the bank has seen “a lot” of money flowing into European stock markets, and expects equities will extend this year’s gains once the European Central Bank starts buying assets in March through its quantitative easing program.
The surging franc is increasing the cost of business for Swiss exporters and depressing private consumption, meaning the country will experience a recession this year, Junius, 46, said.
Safra Sarasin no longer advises clients buy certain Swiss companies such as Swatch Group AG and Clariant AG, where earnings may decrease because of the stronger currency. The firm still expects shares in Switzerland’s UBS Group AG and SGS SA to advance this year.
