No "Risk-off" at Chefinvest

The current Chefinvest indicators do not paint a uniform “risk-on” or “risk-off” picture. The differences between countries and regions are now significant. Our signals are particularly positive for Japan, Hong Kong, Switzerland, and Brazil. The U.S. also remains positive overall, while the broader eurozone is falling significantly behind.

External strategists are generally positive as well, but they are placing different emphases. Citi has recently become more aggressive and has actively increased its equity holdings. UBS remains positive but is paying closer attention to the effects of higher interest rates. Deutsche Bank is confident in robust earnings momentum and is more optimistic about Europe in particular than Chefinvest. LGT continues to favor the U.S.

Higher interest rates – Headwinds, but not yet a fundamental shift

The recent interest rate hikes by the Fed, the ECB, and the Bank of Japan, as well as the rise in the 10-year U.S. yield to around 5.2%, are undoubtedly increasing pressure on stock valuations. However, this effect is already visible: The S&P 500’s forward P/E ratio has fallen by about 17% since November. Crucially, higher interest rates have so far weighed more on valuations than on corporate earnings. Citi continues to see robust earnings revisions, high margins, and no significant deterioration in corporate financing. Higher interest rates are therefore unwelcome, but as long as growth and earnings keep pace, they are not yet a reason for a general “risk-off” move.

UBS makes an important caveat: It would become problematic if the interest rate hikes turned into a pronounced tightening cycle, causing growth and earnings to slow significantly. Historically, this distinction has been crucial for stock performance.

For Chefinvest, this means more valuation discipline and selectivity, but not fewer stocks.

U.S. – Quality and Growth Are More Convincing

Chefinvest’s outlook for the U.S. has recently improved. For the S&P 500, the one-month signal is slightly positive, while the twelve-month outlook is among our strongest signals. The Nasdaq is positive for both one and twelve months. Only the Dow Jones remains negative in the short term. Consequently, our model currently favors growth and quality over the broader cyclical market within the U.S.

Citi is already taking it a step further and has increased its allocation to U.S. stocks. U.S. large-caps, in particular, are favored due to strong earnings revisions, high interest coverage, and valuations that have become more attractive. This is fundamentally in line with our signal, even though we are not currently increasing the equity allocation across the board. The U.S. remains a strategic core market, with a preference for profitable growth companies and large-caps.

Switzerland – Quality Continues to Deliver

Switzerland is among the more compelling Chefinvest markets. Both the SMI and SMIM are showing a clearly positive signal in the short term. The outlook remains positive over a 12-month horizon as well, albeit less pronounced. From a sectoral perspective, Switzerland is well-positioned for the current environment: Healthcare, high-quality industrials, and financials combine earnings quality with comparatively defensive characteristics.

This mix appears particularly attractive in a higher-interest-rate environment. Switzerland therefore remains one of our preferred regions—less spectacular than AI, but occasionally offering the pleasant side effect of actual profits.

Europe remains the biggest point of divergence in opinion.

The Euro STOXX is showing a slightly negative signal at Chefinvest for both the one-month and twelve-month horizons. For the CAC 40, the picture is even weaker. France thus remains among the markets where our model offers little cause for enthusiasm.

Deutsche Bank is significantly more positive. It points to robust European corporate earnings and notes that Europe can benefit more strongly than in previous technology cycles from investments in industry, infrastructure, electrification, and AI infrastructure. Europe’s industrial companies, in particular, could thus indirectly become winners of the AI cycle.

Germany is therefore of particular interest . The DAX is showing a slightly weaker signal in the short term but turns clearly positive over a 12-month period. Here, Chefinvest and Deutsche Bank’s views are converging over the longer term. For us, Germany therefore remains a market not worth chasing in the short term, but an interesting one in the medium term, particularly due to its exposure to automation, electrification, mechanical engineering, and infrastructure. Austria stands out positively: The ATX is constructive across both time horizons. Italy is also improving, shifting from a slightly negative short-term signal to a positive 12-month signal.

Japan – highest consensus

Japan is now among the most compelling regions. The Nikkei is showing a positive signal at Chefinvest for both one month and twelve months.

Citi confirms this signal on a fundamental basis and has since raised Japan from a slight underweight to a moderate overweight. Earnings revisions are particularly noteworthy: positive revisions now outnumber negative ones by a ratio of 2.6 to 1, while corporate profitability is at a historic high. Deutsche Bank also takes a positive view of Japan. This indicates an unusually high degree of consensus among Chefinvest, Citi, and Deutsche Bank. However, given a year-to-date (YTD) performance of already around 33%, we wouldn’t recommend chasing every market move…

Hong Kong/China – Strong Chefinvest Signal Despite Weak Performance

The Hang Seng is particularly interesting: Despite a negative year-to-date performance so far, Chefinvest is showing positive signals for both the one-month and twelve-month horizons. This distinguishes Hong Kong from markets where our model merely projects existing momentum. Here, it signals a potential improvement following prior weakness.

UBS also remains positive on Chinese technology, AI, and semiconductor localization. Deutsche Bank sees opportunities in technology and advanced manufacturing, while real estate and domestic consumption remain weak. Our positive assessment therefore remains selective: For Chefinvest, China/Hong Kong is primarily a technology and industrialization play, not a blanket bet on the Chinese economy.

Sectors—here, the consensus is greater than for countries

When it comes to sectoral positioning, Chefinvest and the external strategists are much more aligned.

Industrials remain one of our preferred themes. AI capex, reindustrialization, electrification, power grids, and infrastructure form a multi-year investment cycle. This is precisely where Deutsche Bank’s analysis is important: While Europe has fewer large AI platform companies, it does have numerous companies needed for the physical implementation of the AI investment cycle. AI infrastructure also remains central. The investment thesis is broadening from the major technology platforms to semiconductors, data centers, power supply, cooling, automation, and engineering. Cybersecurity is now gaining additional importance. Citi expects spending on AI security to grow by approximately 65% annually between 2026 and 2028—about five times as fast as total cybersecurity spending. This offers an opportunity to participate in the AI cycle.

Healthcare remains our preferred defensive growth sector. The combination of stable earnings, structural growth, and lower sensitivity to economic cycles is particularly attractive in the current interest rate environment. We remain more cautious on Consumer Discretionary. Higher financing costs and persistently elevated inflation are hitting consumption-dependent business models harder; this is also a reason for our weaker assessment of France.