Global Equity Quarterly Still Bullish, Just Less So Citi Research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Global Equity Quarterly
Still Bullish, Just Less So
 Strong Start To Year — Global equities rose 11% in 1Q12 as fears of a global
double-dip receded. Economists and analysts turned from net GDP/EPS
downgraders to upgraders over the quarter.
 Consolidation Appropriate — After such a strong start to the year, Citi strategists
anticipate some profit taking, perhaps triggered by further EMU concerns. This
would represent a buying opportunity, in our view.
 Still Good Value — Global equities trade on just 12x 2012’s increasingly robust
EPS forecast, 25% below the long-run average of 16x. We target 360 for end 2012
on the MSCI AC World benchmark (ended 1Q at 333).
 Regions — We favour Japan and Global Emerging Markets, especially in Asia.
These markets look reasonably valued and should benefit from easing monetary
conditions. We are now Neutral on European equities. We cut Australia to
Underweight given relatively sluggish EPS trends. Relatively expensive valuation
means US equities remain Underweight.
 Global Sectors — We raise global Industrials to Overweight and cut Financials to
Neutral. This dials down our beta, but not too much. Cheap Utilities replaces
expensive Consumer Staples as our preferred defensive sector. We cut Telecoms to
Underweight. Overall, our sector strategy retains a pro-cyclical bias.
 Global Favoured Stock List — Agricultural Bank of China, Apache, BHP Billiton,
Canon, Charles Schwab, Daimler, Endesa Chile, Fanuc, Fedex, GlaxoSmithKline,
Goldman Sachs, Lam Research, LVMH, Pernod-Ricard, Qualcomm, Rolls-Royce,
Samsung Electronics, Surgetneftegaz, AES Corp, Wipro