German IFO, European PMI, Philly Fed all rise in Feb; stay long cyclicals : Credit Suisse

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Asia Equity Strategy -------------------------------------------------------------------------------------------
German IFO, European PMI, Philly Fed all rise in Feb; stay long cyclicals

● With February data on global IP (industrial production) continuing
to rise, we continue to Overweight cyclicals (Korea, Taiwan,
Consumer Discretionary, Tech, Energy and Materials).
● Recently released February data for global IP include the
European PMI (Purchasing Managers Index, Manufacturing)
which rose to a record high of 59 (see Figure 1). German IFO
business expectations also rose to a record high of 107.9 in
February. And in the US, the Philadelphia Fed Index rose to 35.9
in February, the highest level since 2004 (see Figure 2).
● At the country level, Korea continues to be the cheapest market
within Asia trading at a 23% discount to the region (see Figure 3).
The average discount for Korea over the last five years is 12%.
While Taiwan has dropped out of the cheapest four club, we note
that inflation in Taiwan is just 0.8%.
● At the sector level, Figure 4 highlights Consumer Cyclicals and
Tech as the two most undervalued sectors in the region. Energy
and Materials are the 5th and 6th most undervalued.


German IFO, European PMI and Philly Fed all rise in
February
With February data on global IP (industrial production) continuing to
rise, we continue to Overweight cyclicals (Korea, Taiwan, Consumer
Discretionary, Tech, Energy and Materials).
Recently released February data for global IP include the European
PMI (Purchasing Managers Index, Manufacturing) which rose to a
record high of 59 (see Figure 1).
German IFO business expectations also rose to a record high of 107.9
in February.
And in the US, the Philadelphia Fed Index rose to 35.9 in February,
the highest level since 2004 (see Figure 2).


At the country level, Korea continues to be the cheapest market within
Asia, trading at a 23% discount to the region. The average discount
for Korea over the last five years is 12%. While Taiwan has dropped
out of the cheapest four club, we note that inflation in Taiwan is just
0.8%.


At the sector level, Figure 4 highlights Consumer Cyclicals and Tech
as the two most undervalued sectors in the region. Energy and
Materials are the 5th and 6th most undervalued.