Analysts Swiss credit reiterated their “underweight” stance on most European non-financial cyclicals for valuation reasons – but not for minors.
According to the Swiss broker, stocks in the sector valued the purchasing managers’ indices at 73.0 points, which corresponds to euro area GDP growth of 6.5%.
In addition, the price / earnings ratio and price / book were at the very top of their valuation ranges, with cyclicals outperforming more than in any other period, top to bottom.
“We are underweight hotels, retail, parts of capital goods, freight forwarders and luxury goods (we are reducing our weightings in all of these areas to offset an increase in our weighting in mining)”, they said in a research report sent to clients. .
Mining, however, had outperformed in many periods where cyclicals had underperformed.
Macro was now “a lot more” supportive as well, they explained.
Most of the Chinese tightening and PMI slowdown was now behind investors, with Credit Suisse economists expecting global industrial production dynamics to accelerate and inflation expectations to rise.
They also believed that the so-called “bear market rally” in the US dollar was “near an end”.
Among other actions, Credit Suisse highlighted the actions of Anglo-American, Rio Tinto, First Quantum, Alcoa and South 32.