According to Japan’s Osaka Financial, economists at British bank, The Royal Bank of Scotland, have told clients to “sell everything” except high quality bonds in anticipation of a cataclysmic collapse in global stock prices in 2016.

The stark warning came as global markets reeled following deep selloffs in Chinese equities which were mirrored to some extent in Europe and the Untied States. According to the RBS client note, stocks could selloff by up to 20% in 2016 while oil could drop as low as $16 a barrel.

“We’re not as bearish as RBS principally because we don’t think the slowdown in China’s economy is as ominous as broader investor sentiment seems to think it is. There are signs that the country’s exports are picking up and there’s also evidence to suggest that the interest rate cuts and other measures introduced by the country’s central bank are beginning to work,” explained Cameron Deele, Director of Portfolio Management at Osaka Financial.

“That said, we most certainly do think stocks could fall sharply in the US now that the Fed is trying to get investors accustomed to the idea of tighter monetary policy. Cheap money was always at the root of the huge run up we experienced in US equities since quantitative easing began in 2008 and, now that’s no longer in the equation, we should expect a lot of the froth to be taken out of prices” added Deele.

Osaka Financial believes that investors must come to grips with the unwinding of positions that have been inflated by unprecedented, post-financial crisis monetary stimulus but it says it remains positioned to take advantage of further stimulus as central banks contend with slower growth in advanced economies in 2016.

About Osaka Financial
Established in 2007, Osaka Financial is a fully-independent investment and asset management practice providing bespoke financial and wealth management solutions to individuals and families who need to build upon and conserve their wealth. We provide a comprehensive range of services including asset management, retirement planning and portfolio design.

Staffed by a number of exceptionally well-qualified finance professionals, Osaka Financial’s business philosophy reflects the core values of its founders: uncompromising independence, clarity, performance, fiduciary responsibility and integrity.