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Berenberg: Capital inflow to the stock market will continue, but in the short term it is overheated

Schedule S&P 500 Index at intervals of 1 week

Stock markets in the US and Europe are overbought, write strategists at the Swiss bank Berenberg (founded in 1590, 41.3 billion euros under management – approx. ProFinance.ru) Jonathan Stubbs and Ed Abbott. This, they said, is evidenced by the relative strength indices (RSI).


“In such cases, the correction does not always occur, but this is a sign that the markets are overheated and investors should consider whether they want to stay long at current levels,” the experts write. “Stocks are expensive in absolute terms, but they look attractive compared to bonds and cash. Therefore, over time, we should expect even more capital inflows (great rotation) into this asset class. “


This should offset short-term risks and fears of a bursting bubble in the stock market, as well as create prospects for further growth, which, however, will be rather bumpy, strategists at Berenberg say. They recommend reducing the share of bonds in the portfolio and adjusting its structure as follows: 40% in stocks, 10% in bonds, 20% in gold and bitcoin and 30% in alternative assets like carbon permits * and real estate.

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