Summary
􀀗 No need to rush: economic risk – and financial debris – will keep
volatility high into H2. Our end-year index targets are cut by a
further 5% from April’s, though they remain above current levels
􀀗 We stay overweight the US, but belatedly close our underweight
on Japan. Europe becomes our new underweight. After much
debate, we stay neutral on emerging markets
􀀗 We add to inflation/climate change hedges, stay overweight oil
and capital goods, fully-weighted on mining. We cut financials on
the inflation/rate outlook, and still avoid many consumer sectors

H1 2008 might have been designed to force active managers out of business: volatile moods hurt bulls
and bears, fast and slow money alike. Bulls were hit by fears of banking collapse; a mooted re-run of the
Great Depression; and now, a few brief weeks later, spiralling oil-driven inflation and interest rate
concerns (we go to press with oil prices spiking to a new high on Middle East fears, and stocks back at
their March lows). It is not unknown for financial pundits to exaggerate, but these latest worries have
some plausibility: some revival in inflation has long seemed likely.
Bears were often frustrated too. The Fed was flexible; banks raised new capital; the US economy didn’t
shrink; non-financial profits look stable; the immediate upturn in core inflation in developed markets is
modest, and headline rates may peak soon. The Fed may not follow the inflation-targeting ECB – and if it
does, it may be because the US economy is more resilient than feared.

In mid-May we worried that the revised end-year targets for major markets we set on April 1st had
become overly cautious. We are now cutting them by around 5%. This still implies some recovery, but
once again, the easiest call is that volatility seems likely to stay high for a while, and investors may get
several opportunities to put money to work: there is probably no need to rush.
In emerging markets, admittedly, headline inflation is looking more contagious. At the very least this will
remind investors that these markets are still higher-risk, and it might yet prompt a more fundamental
reappraisal of the bloc’s longer-term growth characteristics. But for the time being, strong performances
by the resource-rich markets, and ongoing growth in Asia, are compensating, and we see the bloc
continuing to trade more-or-less in line with the global benchmark.
In a nutshell:
􀀗 More volatility into H2 on economic risk and financial debris; but oil prices and headline inflation to
peak, ABS-write-downs to slow further and non-financial profits to hold up. End-year MSCI allcountries
target cut by 5% – but remains above current levels
􀀗 Still prefer the US. Inflation-targeting Europe (ex-UK) to suffer most from inflation risk: cut to
underweight. Japan’s monetary climate not so bracing, (belatedly) raised to neutral. Stay neutral
GEMs (and UK).
􀀗 Chemical and utilities weights raised in the EU and US: both sectors benefit from inflation/climate
change themes. Stay overweight oil and capital goods, and fully-weighted on mining, partly as
inflation hedges. Avoid many developed consumer sectors, partly for the same reason.
􀀗 Higher inflation and interest rate risk entering H2 are bad for financial stocks, as is intensified
regulation: we cut our European positions here, painful though it is at these levels.
􀀗 We revisit the six themes we identified as non-directional drivers at the start of the year – inflation,
climate change, M&A and political risk are all likely to remain relevant in H2 (the latter increasingly
as the US election approaches). We feel less positive about the growth theme; and would shelve
financial sector rehabilitation: the bloc can lead an H2 rally (hence we retain a small overweight in
Europe), but as noted, heightened inflation/interest rate risk is a fundamental deterioration – and
regulators have it in their sights. This persistent offender may now be beyond rehab.

目录

Indices, regions, sectors,
stocks 4
Macro matters 12
Annex I: valuation readyreckoner/
macro chartbook 28
Regional summary 37
Sector strategy 48
Sector strategy 48
Sector themes 56
Appendix: 77
Profitability data 77
Sector Scorecard 84
Stock screens 93
Data pack 104
Disclosure appendix 117
Disclaimer 124

[此贴子已经被作者于2008-7-21 0:22:47编辑过]