Equities: Stay positive with a value-cyclical tilt

En bref

Following a monster rally in stocks last autumn, multiples are well above historical averages, but equity investors can count.
Focal Point

Highlights:

  • Following a monster rally in stocks last autumn, multiples are well above historical averages, but equity investors can count on lingering low yields, tighter credit spreads and increasing central banks’ balance sheets which in turn maintain low the cost of equity and the discount rate of future cash flows.
  • The equity risk premia fell due to the sharp decrease in policy uncertainty and poor Fixed Income returns should keep them tight. Our positive 2021 equity view relies on earnings upturn and not on any equity multiple expansion.
  • Earnings should increase appreciably in the next two years: for the euro area (EA) we forecast profits to grow by more than 40% in 2021 and some +14% in 2022 (back to 2019 levels by H2 2022), with risks on the upside.
  • Value and cyclicals have outperformed last autumn and will continue to do so over the coming months. We favour Japan, UK and EMs and prefer EMU vs US over 12 months.

Download the full publication below

FOCAL POINT EQUITIES: STAY POSITIVE WITH A VALUE-CYCLICAL TILT

Also interesting

Picture

© Generali Investments, tous droits réservés. Ce site internet est publié par Generali Investments et est considéré comme une communication marketing et une promotion financière liée aux produits et services des sociétés du groupe Generali suivantes : Generali Investments Partners S.p.A. Società di gestione del risparmio, Generali Insurance Asset Management S.p.A. Società di gestione del risparmio, Generali Investments Luxembourg S.A. et Generali Investments Holding S.p.A. (ci-après dénommées ensemble Generali Investments). En outre, le site peut contenir des communications de marketing et de promotion financière de produits et services de sociétés faisant partie de la plate-forme Multi-Boutiques coordonnée par Generali Investments Partners S.p.A. Società di gestione del risparmio, et en particulier de Generali Global Infrastructure, Sycomore Asset Management, Aperture Investors LLC, Plenisfer Investments SGR, Lumyna Investments et Generali Real Estate S.p.A. Società di Gestione del Risparmio.