| 2011 Forecast (stocks, currencies, commodities) |
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Kindly find below some ideas, forecast and recommendations from major banks for 2011 Summary: The outlook is positive on equities (markets will be volatile with important drawdowns), very cautious on bonds and positive on main commodities such oil, gold and copper. Analysts are still positive on emerging markets but the battle against inflation will likely dominate many of these countries in 2011 Recession and deflation are far away but growth remains weak USD is to weaken further. Below are the recommendations and summary for each Bank (All detailed research and analysis are available upon demand) : Barclays: Equities S&P500 target: 1,420. According to Barclays equities will perform well with some corrections in 1st half 2011. Favored sectors: Energy, industrials and technology Underperforming sectors: Telecom, healthcare and utilities FX On the FX side, GBP is the most attractive and a good trade idea should be GBP/JPY Commodities Crude, copper and gold will be the best performers ( Top US and european stocks are attached ) Goldman Sachs Real global GDP expected to rise 4.6% in 2011. GS expects the most significant shift to take place in the US with a substantial acceleration in real GDP growth over the next 2 years to a 4% pace in mid 2012. Growth forecast for 2011: USA (+2.7%) - Euroland (+2%) - Japan (+1.1%) - China (+10%) - India (+8.7%) - Brazil (+5%) - Russia (+5.3%) - Australia (+3.7%) - Canada (+2.5%) - Emerging markets (+7.4%) Equities S&P500 Target: 1,450 Overweight: Energy, Financials and Information technology Underweight: Utilities, Healthcare, Consumer Staples Neutral: Industrials materials, Telecom, Consumer discretionary Asian Valuation are attractive: Taiwan, Korea and Singapore are overweight. Australia and India underweight Commodities Gold prices rose around 25% this year and are still expected to climb in 2011 to 1,690 as the resumption of quantitative easing will keep US real interest rates low. Because of growth acceleration, US real interest rates will begin to rise in 2011 likely causing Gold prices to peak near 1,750 in 2012 Oil: Cyclical recovery of world oil market set to enter its 2nd stage in 2011(new bull market) which will drive oil prices above 100 usd. 2011 forecast is 105 usd GS is also long Copper (2011 forecast at 11,000 usd) and Platinum. Silver is seen at 28.2 usd Citigroup DowJones/S&P500 to have a volatile year with intra year drawdown of +/- 20% and finish the year with a double digit % gain (13%-17% up) Commodities to rallye strongly with crude oil back over 100 usd and Gold above 1,700 usd EURUSD to rallye double digit % (11%) and the USD index to drop about 8% US 10 years yields to rise at least 4.00% and quite possible back over 4.50% UBS Gradual and sustainable recovery (2011 global GDP 3.7%, vs. 4.1% in 2010). 2.7% GDP frowth in the US Do not expect a great bear market in govt bonds: (1) growth not strong enough; (2) no meaningful inflation pressure Risks: (1) overheating in emerging markets; (2) sovereign and bank risk in Europe; (3) rise of protectionism In the US: 2.7% growth, 9% unemployment, 3% 10-year yield. Fed funds to rise to 1.75% by the end of 2012 The drivers are : (1) easing lending standards; (2) household savings stop going up; (3) home prices stabilize; (4) profits boost business spending; (5) QE2 aids asset prices. Equities 16% upside seen for Eurostoxx and 18% for FTSE France and Italy have the cheapest stock valuation in europe and are favoured as a buy European stocks: Cap Gemini, St Gobain, ST Micro, TF1, Total, ENEL, Intesa San Paulo, Mediaset, Wacker Chimie, Aixtron, Smith & Nephew, BAE Emerging markets and Japan are overweight, US neutral and Europe underweight FX Buy USDJPY Sell GBP and EUR Swiss Franc is the new Deutsche Mark Euro target: 1.30 GBP target: 1.63 Julius Baer Overall growth will still positive despite some slowing for some economies. Emerging markets will continue to dominate global growth Equities Continuation of low growth, low inflation environment in developped economies and inflation rising in fast growing emerging markets Risk appetite and equities supported by Fed easing, robust earnings and reasonable valuations Emerging Asia is one of the key call for 2011 : Revising down the target on the Chinese market index from 3,500 to 3,300 (P/E 15.4 and P/B 2.7). Target on the HongKong chinese H shares index maintained at 15,000 Revising up the target on the Hang Seng (Hong Kong index) to 27,000 (+20%) Neutral on India (forward P/E at 16.5, trading at a premium to its peers) Latin America is expected to benefit from robust chinese demand for commodities. Stocks: Qualcom (US), Adecco (Swiss) and BBVA banco bilbao vizcaya (Spain) Commodities Oil and Copper favoured FX Supportive environment for carry trades Long Asian or carry currencies. Short USD, euro and yen Recommended Asian bond funds: Templeton Asian bond fund and Fidelity Asian high yield fund UBP Overweight stocks as long as rates are low Underweight Gvt bonds Favor stocks over bonds Russia and China best emerging markets stocks Overweight energy and financial sector Convertible bonds to perform well. Commodities Oil, Copper and Platinum FX Diversification from Eur to CHF, SEK, NOK, PLN (poland) and TRY (Turkey) Diversification from USD to CAD, SGD (Singapore) and MXN (Mexican) Credit Suisse Buy Gold below 1,400 USD to weaken moderately further versus major other currencies. EUR-USD above 1.40 Buy GBP, Asian currencies and MXN European stocks for 2011: BG, Royal Dutch Shell (energy) - Siemens, Schneider electric (industrials) - WPP (media) - Anheuser Bush, Danone, Imperial tobacco (consumer) - Fresenius, Bayer (healthcare) Deutsche Bank, Allianz, Axa (financials) - SAP (technology) - KPN (telecom) - Gdf suez (utilities) US stocks for 2011: Suncor energy, Hess, Petrobras (energy) - Vale (materials) - Honeywell, GE, 3M, Caterpillar (industrials) - Nike, Starbucks, Carnival (consumer discretionary) Wall Mart, CVS caremark, Coca Cola, Kraft Foods, Philip Morris (consumer staples) - Pfizer, Baxter international (healthcare) - Google, Microsoft, HPQ, Qualcomm (technology) - AT&T (telecom) Swiss stocks for 2011: Givaudan (materials) - ABB (industrials) - Swatch Group, Nestle, Lindt (consumer) - Novartis (healthcare) - Zurich Financials, Helvetia (financials) - Logitech (technology) Standard Chartered USD will outperform in the 1st half of 2011 then it will resume its trend depreciation in 2nd half. Medium term long USD-JPY More upside for Crude Oil but limited (95-100) Platinum to outperform Gold Copper to outperform Aluminium Macquarie Bank Weaker growth in 1st half 2011 but no recession, followed by renewed economic acceleration ----> Bullich outlook for equities Target for eurostoxx: 2,850 (+10%) European Stocks for 2011: HSBC, Porsche, XStrata, Swiss Re, Ahold, ABB, BG Group, ING, Telefonica, GDF Suez, Sanofi, Bayer, Royal Dutch, Deutsche Telekom JP Morgan Records low are possible on USD-JPY (78), EUR-CHF (1.27) and USD-CHF (0.86) USDCAD target 0.96, USDAUD target 1.04 and EURUSD target 1.48 Top commodities picks are Oil (100 target), Copper, Platinum and Palladium Rates unchanged in the US and Europe, seen rising to 1% in switzerland at the end of 2011 A list of top picks and stocks to avoid is attached. Among stocks to avoid, some big names such Axa, adidas, Diageo, Fiat, Merck, RWE and portugal telecom Morgan Stanley US Equities best ideas for 2011 Apple (target 375 usd) - BorgWarner (BWA target 80) - Ford (target 23) - Google (target 730) - Sclumberger (target 130) - Tyco international (target 49) - Union pacfic (target 112) - Scripps network (SNI target 60) European equities best ideas for 2011 ABB - British Airways - Danske Bank - Fiat - Intercontinetal Hotels - Nokia - Thyssen Krupp FX outlook Short Eur vs Usd target 1.18 (stop loss 1.38) Buy USD and GBP - Sell EUR and JPY Long MXN vs EUR and USD Buy CHF, NOK, SEK vs EUR Buy RUB These are only information compiled from all the above mentioned institutions and not recommendations by Blom Bank Switzerland. JP Morgan stocks top picks and avoid Best Regards Ziad Younes BLOM BANK (Switzerland) SA
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