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LGT Asset Allocation – November 2019

October 30, 2019

Our baseline scenario remains growth at a lower level than at the beginning of the year, but no recession. We continue to prefer equities over fixed-income investments. In the area of alternative investments, gold remains our favorite.

Asset Allocation LGT Private Banking Europe

We prefer equities over fixed income investments

In recent weeks, we have seen a stabilizing slowdown in global economic activity. It seems that there is literally light at the end of the tunnel. However, since the data are still giving mixed signals, a complete all-clear signal cannot be given yet. Our baseline scenario remains growth at a lower level than at the beginning of the year, but no recession. We therefore expect the central banks – with a focus on the European Central Bank and the US Federal Reserve – to continue pursuing a very expansionary monetary policy. The guardians of the currency will try to stimulate the economy once again with further injections of money. A solution or a short-term transitional deal in the US-Chinese trade conflict could not only stabilize growth, but could also brighten consumer and producer sentiment. 

We stand by our constructive assessment of the markets and continue to favor equities over bonds. On the one hand, equities have upside potential and on the other, they have a more attractive risk-return profile than bonds. Due to a certain stabilization in the macroeconomic data set, any setback at the country level or in individual sectors or industries should be used to build up positions. In alternative investments, gold remains our favorite.

Equities: Uneventful US earnings season brings little new information

The US companies are world champions in managing the expectations of the market players regarding the upcoming corporate results. Even in the current reporting season, there is not much news to report across the Atlantic. In the run-up to the reports, the companies reduced expectations of capital market participants to such an extent that a large number of corporates were again able to exceed their profits and revenues for the past quarter. The outlook for the current quarter and the coming year did not provide any new significant information either. This earnings season could therefore be described as "uneventful" and ticked off. Indeed, the major concerns of individual investors regarding a massive profit recession have not materialized. The economic environment still seems to be too strong for that. Particularly in the USA, the supporting share buyback programs of companies are still too massive to allow earnings per share to collapse. At the regional level, we continue to prefer the German stock market, which has the greatest potential for stabilizing the macroeconomic environment. The healthcare sector remains our favorite. We have realized profits in non-cyclical consumer goods. We are more positive about industrial stocks again. Both sectors currently have a "neutral" rating.

Bonds: Corporate bonds remain in focus, especially versus interest-free riskier assets

The environment for bonds remains very challenging, not least because of the ECB's new quantitative easing program, which will open the money floodgates again from 1 November 2019.  This is particularly evident with government bonds in the euro zone, where the search for a positive yield has already assumed bizarre excesses. A ten-year government bond from Greece, for example, yields only 1.2% p.a., whereby the risk of this investment is primarily high and not the interest rate. In this environment, we remain faithful to corporate bonds with appropriate quality and expect stable credit risk premiums despite the late-cyclical economic environment. With regard to remaining maturities, we recommend avoiding very long maturities and even keeping a somewhat shorter duration in the portfolio compared with a benchmark. Due to political uncertainties, we remain on the sidelines with emerging market bonds, but prefer hard-currency bonds to local-currency bonds.

Alternative investments: Gold still in the consolidation phase, US dollar at a crossroads

After its brilliant rise this year, gold remains in a consolidation phase as expected. First, long-term US interest rates have risen slightly in recent weeks. Historically, this has always meant a certain headwind for gold. A second factor is the US dollar, which tends to be strong in the face of weakening global economic growth and can therefore also be seen as a brake on further price gains for gold. The US dollar could well be at a crossroads in the coming months. Should the economic environment stabilize or even slightly improve, the greenback should come under pressure, as the long-term prospects for the US currency are fundamentally anything but rosy.

What we like What we dislike


German stock index (DAX)


Fixed Income

Short-term US Treasuries

Investment grade bonds

Swiss government bonds

EU government bonds

High-yield bonds



Insurance-linked bonds

Hedge funds

Listed Private Equity



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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Author: Thomas Wille, Head Research & Strategy, Email:

Editor: Natija Dolic, E-Mail:
Source: LGT Bank (Switzerland) Ltd.

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Herausgeber: LGT Bank (Schweiz) AG, Glärnischstrasse 36, CH-8027 Zürich
Redaktion: Alessandro Fezzi, +41 44 250 78 59, E-Mail:
Quelle: LGT Bank (Schweiz) AG
Konsumentenpreise (J/J)
MEZLandIndikatorAktuell09:15ESMarkit PMI52.109:45ITMarkit PMI50.109:50FRMarkit PMI51.709:55DEMarkit PMI51.410:00EUMarkit PMI51.510:30GBMarkit/CIPS PMI49.710:30EUSentix: Investorenvertrauen-5.815:45USMarkit PMI51.616:00USISM PMI: Dienstleistungen55.1