The broker’s only remaining domestic UK “underweight” is on REITs, particularly offices, which it sees as the most sterling- sensitive sector.
Share prices are also not discounting a sharp enough fall in commercial property values, Credit Suisse says.
Stocks exposed to the domestic British economy, such as house builders and property companies, slumped after Britain’s shock vote on June 23 to quit the EU.
Aberdeen Asset Management yesterday lifted the suspension of its £3.2bn (€3.8bn) UK property fund, as funds attempt to control withdrawals after the Brexit vote.
More than £18bn in UK commercial property funds aimed at retail investors was frozen last week following a tide of redemption requests after the Brexit vote last month.
Aberdeen temporarily suspended the fund last week and cut the value by 17%. It has extended the suspension twice.
“The market may take time to find its level,” Aberdeen chief executive Martin Gilbert said.
“Investors should be aware the price may be adjusted daily to reflect the funds’ requirement to provide liquidity and the need to protect all investors,” Mr Gilbert said. The fund is looking to sell some of its property assets to meet redemption requests.
Credit Suisse analysts said they had upgraded house builders outside London.
“We upgrade non-London housebuilders to ‘benchmark’, as outside of London, the house price-to-wage ratio is not extended, the rental yield is around 2% above the mortgage rate, it is a highly undisrupted sector where supply is two-thirds of required demand and government policy will likely remain supportive,” they wrote in a strategy note.
They also upgraded UK life insurers to “overweight” but cut European utilities to “underweight”.
Meanwhilke, interdealer broker ICAP reported a 15% slump in first-quarter average daily volume on its foreign exchange trading platform EBS, despite a trading surge after Britain’s vote to leave the EU sent sterling plunging.
The company, soon to be named NEX Group after the sale of its telephone broking business to rival Tullett Prebon, said daily volumes roughly doubled to top $200bn (€180.5bn) on its currency trading platform the day after the June 23 vote.
Sterling has fallen to its lowest level against the US dollar since 1985.