(Bloomberg) — Credit Suisse (SIX:) Group AG’s global investment committee slashed its stocks allocation to neutral from overweight on Tuesday, citing increasing risks from the quickly spreading omicron variant.

“The risk is considerable that the U.S.A. as well as large parts of Continental Europe will likely not be able to avoid stringent lockdowns over the winter months,” committee members led by Michael Strobaek wrote in a note, commenting on the 3-to-6-month horizon.

Over the last weeks, U.S. stocks and European stock have fallen from records highs due to the Covid restrictions and hawkish central banking policy. Credit Suisse reported that central bank officials now have a greater focus on controlling inflation than ever before and are less likely to respond forcefully to economic weakness.

“Even though we do not foresee a situation as drastic as at the start of the pandemic, we could face a situation in which the growth prospects are waning while central banks are forced to tighten liquidity at the same time,” the investment committee said.

However, the committee stated that they see stocks as having upside over the next six month because of the strong global growth over the medium-term. In equities they favor more cyclical market like Japan or Germany while leaving the U.K. neutral in light of a worsening earnings outlook. They also keep their government bonds underweight.

Credit Suisse expects a 11% upside for both the MSCI AC World Index and the MSCI U.S. Index over the next twelve months.

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