This is a decisive year for independent Swiss asset managers. They require a Finma license to continue operations, while another bad year for stocks will likely take its toll on others. How do they assess the situation?
Independent asset managers in Switzerland consider a recession in Europe to be the greatest risk they face in the new year. Over 70 percent of respondents to a survey share this are of this opinion. The second biggest risk is the ongoing war in Ukraine, followed by uncertainty in China (chart below).
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For independent asset managers, 2023 is a decisive year in several respects. From now on, companies will need a license from the Swiss Financial Market Supervisory Authority (Finma) to continue their activities. So far, many firms failed to comply with this requirement, as finews.com reported on several occasions.
Against this background, many companies, especially smaller ones, are likely to exit the market, an opinion shared by the firms themselves. The majority expect around 1,500 independent asset managers to remain standing in Switzerland over the medium term from the current level of around 2,200 (chart below).
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Higher Stock Prices Ahead
The quarterly Aquila Asset Managers Index (AVI), is published by the Aquila Group in conjunction with finews.com. The index summarizes forecasts and assessments of 150 independent asset managers in Switzerland.
Despite many uncertainties and risks in the new year, independent asset managers expect higher share prices over the next three months, with 59 percent being of this opinion, compared to 45 percent three months ago. Lower share prices are expected by 20 percent of respondents, compared with 30 percent at the end of September 2022 (chart below).
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Divergent Interest Rate Views
When it comes to interest rate policies of the central banks, asset managers disagree on when the Federal Reserve will end its cycle of rate hikes and push rates lower. Under a quarter expect a cut as early as the third quarter, while just over a quarter expects the Fed to hold off until the fourth quarter.
Around 30 percent believe the US central bank will wait until 2024 to start pushing rates lower again (chart below).
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Verhalten optimistisch
In drei Monaten (vgl. nachstehende Grafik) sehen die unabhängigen Vermögensverwalter den Swiss Market Index (SMI) auf einem Stand von 11'031 (aktuell: 10'729).
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Gold Below $2,000The tighter monetary policy stance of major central banks has clouded the view of independent asset managers in gold. They are skeptical about the prospects for the precious metal.
Respondents see the price of gold reaching $1,828 per troy ounce by the end of March from $1,841 currently.
Over the same period, they estimate the yield on the 10-year US Treasury at 3.78 percent compared to 3.87 currently, and the euro-franc exchange rate at 0.9770 compared to 0.9858.
- The next AVI Index is scheduled to be released in April 2023.
