Amundi says turns "cautious" on European, U.S. stocks on virus

[February 27, 2020]  LONDON (Reuters) - Amundi Asset Management said it had become "more cautious" on European and U.S. stocks and moved to a "neutral" stance on emerging market equities amid the ongoing selloff sparked by the widening coronavirus outbreak.

"The main risk now is the unwinding of recent market complacency (risk assets at historical highs in February) and the reaction of "animal spirits" that can turn into overreaction," said Pascal Blanque, CIO of Amundi which has 1.7 trillion euros under management.

"In the short term, some profit-taking, risk reduction and increases in hedging are warranted," Blanque said in a note received on Thursday.

World stocks resumed their plunge on Thursday, with more than $3 trillion wiped off their market value this week alone as investors dashed for safe haven assets such as bonds and gold [MKTS/GLOB].

Amundi said, however, that once virus escalation risks receded, cyclical value stocks especially in Europe, domestically focused emerging market equities, emerging currencies and some higher-yielding bonds in developing countries and Italy, would be in line for a rebound.

(Reporting by Karin Strohecker)

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