Switch to Cash, Investors Advised

The volatility of the global equities markets has led a UK private bank to recommend its clients to cash in their investments.

Standard Chartered Private Bank said in a note yesterday that investors should make the move in order to take advantage of cheap shares which could become available later in the year, Reuters reports. The comments follow City speculation that the UK exchanges could move into a "bear market" - defined as when indexes drop in value by 20 percent from a previous high point.

Continuing fallout from the credit crunch, which has put indices under downwards pressure over recent months, was cited by Standard Chartered as a reason for the suggested sell-off.

The firm said that clients should be "underweight" in equities over the third quarter of 2008, and "neutral" on them over the next 12 months. "The big challenges of 3Q08 [ie, the third quarter] are pretty much the same set of concerns that underpinned our bearish view of financial markets in 2Q08," the note continued.

"They include the likelihood of more credit market losses; another spike in credit spreads; a new round of disappointment with economic data; divergence between high earnings growth expectations and disappointing reported earnings; high oil prices; and rising inflation in the face of falling...growth.

"Markets are unraveling at a rapid pace and sentiment is deteriorating with it."