RBS has warned 2016 will be a “cataclysmic year” and has urged clients to “sell everything” as the “exit doors are small”.
The bank has warned clients of a tough year ahead, with a note from its credit team, seen by the Telegraph, cautioning markets could fall by 20 per cent.
The note says: “Sell everything except high-quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small.”
The bank says the current crisis in China will “snowball” and lead to a downward spiral in global markets.
RBS credit chief Andrew Roberts adds: “China has set off a major correction and it is going to snowball. Equities and credit have become very dangerous, and we have hardly even begun to retrace the ‘Goldlocks love-in’ of the last two years.”
In particular he sounds a word of warning to those invested in oil and mining stocks for the dividends.
He says: “All these people who are long oil and mining companies thinking that the dividends are safe are going to discover that they’re not at all safe.”
He claims brent oil could drop as low as $16 a barrel, which follows on from Morgan Stanley’s prediction today that it could drop as low as $20 a barrel.