Cyclical stocks return to analysts' favour
Financial Times; Mar 12, 2002
By INA BAUER and FERDINAND KNAUSS
Defensive stocks are becoming less popular among equity analysts in Europe and are being replaced by cyclical stocks, according to a poll of German analysts by FT Deutschland.
Among the top buy recommendations are technology stocks such as Infineon, the German computer chip group, Nokia, the Finnish telecoms equipment maker, and Siemens, the German engineering group.
The top five buy recommendations in Stoxx, the index comprising the 50 biggest listed European companies, are headed by long-term favourite Nokia, the mobile phone market leader. Others in the top five list are Allianz, the German insurer, Siemens, Telefonica of Spain and Bayer, the German pharmaceuticals group.
The top five recommendations in Dax, the index of German blue chip stocks, are Infineon, Allianz, Siemens, Deutsche Bank and Lufthansa. Of these, only Allianz is not a cyclical stock.
The results of the survey correspond with recent recommendations of leading investment banks. Gary Dugan, strategist at JP Morgan Fleming Asset Management, said: "We especially recommend cyclical industries at the moment, such as paper, steel and oil stocks."
There was, however, a risk with steel shares owing to the introduction of tax on steel imports into the US by the Bush administration earlier this week.
David Bowers, global share strategist at Merrill Lynch, recommended earlier this week to concentrate more strongly on industry and energy shares, at the expense of utility stocks. Participants were much more optimistic about the prospects of Dax, the index of the 30 most important German shares, and Stoxx, the index of Europe's 50 biggest stocks, than in FT Deutschland's last poll. In January they predicted a rise of 5 per cent for the German index over the next three months. This time they projected the Dax to climb 8.3 per cent in three months. The prediction for the Stoxx index rose from 6 per cent to 7.5 per cent.
Nick Sargen, chief strategist at JP Morgan Securities, recommended increasing the proportion of shares in investment portfolios from 45 to 50 per cent, expecting that corporate results would improve from April.
Fresenius Medical Care (FMC), the German medical equipment group, gathered the most sell recommendations, mainly owing to a outstanding court cases in the United States. Also high on the agenda were Commerzbank, the German bank, and Eon, the German utility. |
