LONDON - UBS Wealth Management cut its exposure to emerging market stocks late Thursday, changing its portfolio as an intensification of China-U.S. trade tensions took its toll on markets, the asset manager said in a note circulated on Friday.
The Swiss asset manager closed its overweight in EM equities relative to Swiss equities, chief investment officer Mark Haefele said in the note.
"Valuations across emerging markets remain attractive, but uncertainty about the impact of trade negotiations on global growth is likely to weigh on sentiment in the near term," he wrote, saying the Swiss market's defensive properties would help it perform in volatile markets.
UBS Wealth Management also added an underweight position on the Australian dollar <AUD=> versus the U.S. dollar, saying the currency is sensitive to the cycle and suffers when risk aversion rises.
"Australia is heavily exposed to Chinese trade flows, and we think the Reserve Bank of Australia may be preparing for a rate cut," Haefele wrote.
Talks between China and the U.S. were continuing on Friday morning, with investors hoping for a deal after higher tariffs on $200 billion of Chinese imports kicked in.