Global equities to rise 15% in 2021, Credit Suisse predicts

Global equity markets will rise by 15% by the end of 2021 bolstered by policy support and a move out of bonds, Credit Suisse analysts predicted.

Emerging markets will be the biggest gainers with Thailand, Korea, Brazil and India in focus and China reduced to a small overweight, Credit Suisse said. The analysts added to their overweight rating for the UK unhedged but left the weighting unchanged in local currency.

The bank raised Japan to a small underweight unhedged but kept Japan at benchmark in local currency. Continental European equities stayed at benchmark with a focus on Germany, Spain and Sweden. The analysts increased the size of their underweight on US equities.

"The fundamental supports are policy, the equity risk premium and the beginning of a bond-for-equity switch, as bonds increasingly do not offer diversification," Andrew Garthwaite and colleagues wrote in a note to clients. "Near-term, earnings revisions and excess liquidity are both supportive. We acknowledge tactical indicators suggest a pause, but not a correction."

Garthwaite predicted 4% global economic growth in 2021 with inflation expectations set to rise and the dollar in a bear market. The Federal Reserve will cap any disruptive rise in US bond yields, he said.