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Oil hits $50 and stocks rally, but SocGen remains cautious

16/05/2016

A strategist at the French bank Société Générale is urging investors to take a cautious approach as valuations of equities are high and risks abound from rising interest rates to a slowdown in China.

Even though oil shot back up to US$50 a barrel yesterday from a 13-year low in January and stocks are rallying, a strategist at the French bank Société Générale is urging investors to take a cautious approach as valuations of equities are high and risks abound from rising interest rates to a slowdown in China.

Xavier Denis, the Hong Kong-based global strategist for the private banking arm of SocGen, said at the head of those risks is the possibility that the US Federal Reserve may continue to raise interest rates this year, choking the supply of cheap money that has helped inflate asset prices since the global financial crash of 2008.

And while China’s economic problems seem to be held in check for the time being, a hard landing in the world’s second-biggest economy can’t be discounted in the next couple of years, he said.

 

Read the whole article on The National's website