Investment bank Rothschild is retracting from Dollar investments

The British investment company RIT capital partners has significantly scaled back her involvement in the dollar area.

The major British investment company RIT Capital Partners has significantly reduced the size of its dollar-denominated investments. This is the result of a communication from the Chairman of the Management Board, Lord Jacob Rothschild, to the investors in the first half of 2017.

At the end of 2016, the share of investments in dollars was still 62 percent of total investment. Until June 30, 2017, it was reduced to 37 percent. However, the share of investments in British pounds rose in the same period from about 24 percent to currently 38 percent. Investments in euro quadrupled from only 4 per cent to about 16 per cent. Investments in yen - which accounted for 3 percent of the total investment portfolio at the end of 2016 - were completely divested.

At the end of 2016, the US dollar began to weaken to the euro and most other major currencies, which could be a reason for the withdrawal from this currency. While the price of the euro in December 2016 was still 1.04 dollars, it is currently over 1.17 dollars for the euro.

A major reason for the development is that RIT Capital Partners expects better overall business conditions outside the dollar area in the coming months, for example in Europe and Asia.

We have a special interest in investments that will benefit from the emergence of new technologies and especially the markets in the Far East, which are influenced by the strong growth of the Asian consumer, citing the financial blog Zero Hedge from the letter.

Rothschild expressed a very skeptical attitude towards the current price levels on the stock markets.

We do not believe that this is the right time to go even more at risk. In many cases, stock prices are already very high at a time when economic growth is not secured. The S & P 500 is 25 times the average annual profits of companies compared to a long-term average of 15. (...) The period of monetary policy support could be phased out. Geopolitical problems remain numerous and seem to be increasingly difficult to solve. That is why we remain cautious in our equity markets and have only strengthened them in stocks whose value is driven by identifiable factors or which are consistent with a long-term positive trend.

Helaba (German) also recognizes signs of exaggeration, particularly in the US stock market:

While Euro-titles have been correcting for weeks, the US indices have continued to grow for a long time. Now also the high-altitude flight of the US shares seems stopped. (...) Despite the upward revisions of the profit estimates for the coming 12 months, the valuation situation of the S & P 500 had risen further in recent weeks. On the basis of the most common indicators (P / E, KBV, KCV, and dividend yield), the valuation was clearly above the long-term normal range. Faced with a gradually less relaxed US monetary policy, this is unusual and carries clear features of an exaggeration. On the other hand, the valuation of the DAX and EURO STOXX 50 has recently relaxed somewhat.