The strategist listened to the Swiss bank, Nick Nelson, is planning a difficult new year. But securities are recommended for purchase, such as Valeo, Carrefour and BNP Paribas. Five other French shares are favored by UBS.
Nick Nelson at UBS is not very optimistic about European stock markets in 2020. The strategist forecasts a DJ Stoxx 600 index at 380 points at the end of the year, a decline of 6% on the current level.
The Swiss bank anticipates a decline in corporate profits of 3% next year, well below the 10% increase expected by the consensus of analysts.
The sentiment is no longer bearish on European equities, which could weaken prices by overconfidence.
Uncertainty is great for 2020
If tariffs between the United States and China declined, if Brexit found a favorable outcome and the leading indicators were better oriented, the positive scenario could be put in place.
But the risk comes from a possible shock of demand following the shock of supply, and an increased pressure on corporate margins.
Bank stocks, automobiles, distribution, real estate, construction are favored by the bank. Food, drinks, cosmetics, metals, chemicals, software are underweighted.
Eight French actions recommended
The strategist of the financial institution identified for 2020 four themes carrying stock market and values to purchase for each of them:
A negative interest rate and low inflation environment is conducive to high and sustainable dividends. The bank advises the purchase of Repsol, BP, Eni, Aviva, NN Group.
A comparison of sectoral valuations between the United States and Europe. UBS is positive about crossroads, KPN, Eni, Diageo, Publicis Group.
Potential winners of a European tax boost. UBS recommends the purchase of Valeo, Alstom, Schneider Electric, Siemens, Siemens Gamesa, Vestas, RWE.
The pursuit of the catching up of "value" shares on the "growth" values. The bank advises the purchase of Sanofi, Lufthansa, BNP Paribas, Repsol, EDF, Eni, Philips.