Black Friday Sale

For retailers, the Friday after Thanksgiving is considered one of the most important and highest-turnover shopping days and the prelude to the Christmas season, not only in the US but world- wide. Last Friday, however, the so-called “Black Friday“ of all days took on a completely different meaning for international stock exchanges.?

New corona variant causes Black Friday on stock markets?

The coronavirus variant named Omicron, which was first discovered in South Africa, caused unexpected excitement on the capital markets worldwide and a sell-off on stock exchanges. The most important equity indices around the globe lost between two and five percent. At the same time, the ViX volatility index recorded the fourth strongest increase in the last 30 years (graph 1).

However, it is important to note that volatility in re- cent weeks has been historically very low. Given the high level of uncertainty among market participants and the current valuation levels, this is hardly surprising in hindsight.?

Game changer or buying opportunity??

In such a situation, the question naturally arises for the stock investor, could this be the beginning of a correction or a buying opportunity? As long as there are no new scientific findings on the dangerousness of the new virus variant, the uncertainty factor on the financial markets is likely to remain high. Should Omicron turn out to be even more contagious or more dangerous in terms of the course of the disease, we could well be at the beginning of a major correction on the stock markets.?

After this Black Friday, it would make sense for investors to reduce their risks. Over the past 20 years, US government bonds and the US dollar have consistently performed well in stress situations across all assets. Within the equity allocation, the US has clearly outperformed both Europe and emerging markets in terms of returns. However, if it turns out that Omicron is no more dangerous than the currently dominant Delta variant and, above all, that the effectiveness of the available vaccines is still guaranteed, the all-clear could be given cautiously. The new variant would then most likely have no direct negative impact on global economic growth. Against this background, price setbacks would turn out to be buying opportunities. In this regard, patience seems to be the best advisor at the moment.?

Selective use of weak phases?

At an asset allocation level, we now see less potential in commodities, while the medium-term outlook for equities remains intact. However, we expect that investors will soon focus more on inflation and central bank policy again, despite the ongoing uncertainties regarding the further development of the pandemic. We would therefore use phases of weakness selectively. Fundamentally, selection remains an important success factor.?

In the new year 2022, selection and theme choice will continue to play a crucial role, in our view. In this regard, we will be pleased to present our Outlook 2022 with ten exciting investment themes on December 7, 2021.?