European Stocks Likely to See ‘Catch-Up’ Trade in Near Term: KKR
(Bloomberg) -- European equities, especially financials, will perform well in 2017, KKR’s global macro and asset allocation team led by Henry H. McVey writes in report.
- While KKR has said in the past that stocks with stable earnings looked expensive relative to cyclical peers, outlook today is more balanced
- Emphasises sectors like travel, health/beauty and home improvement as consumption “remains compelling relative to overall trend growth”
- Bank stocks poised to outperform in the next few quarters
- Being overweight innovation in Europe, especially in tech, is key to delivering in both absolute and relative performance, particularly versus the S&P 500 over a longer period
- Says large caps appear more attractive than mid- to small- cap stocks
- KKR is cautious on global trade; production increasingly appears to be moving towards a regional model
- Risk assets could catch up following a Marine Le Pen defeat in the French presidential election, but populist sentiment in Europe is not likely to dissipate
- Boosts European GDP forecast for 2017 to 1.7% from 1.4%, “reflecting the reality that heightened political uncertainty has not yet derailed the region’s surprisingly strong economic recovery”
Alert:
HALISTERSource: BFW (Bloomberg First Word)
Tickers KKR US (KKR & Co LP)
People Henry McVey (KKR & Co LP)
Marine Le Pen (Natl Front Party)
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