With the QE3 candle lit, “the world continues to grope its way ‘out of the darkness’ pretty much in the equity- and risk-friendly fashion that we have been expecting since June,” Nomura says.
But it adds, for continued equity advances US construction needs to strengthen to boost monthly jobs data, resilient US credit conditions need to start translating into resurgent capex and China’s stimulus needs to start materialising.
It tips the US fiscal cliff as the major potential macro stumbling block. It upgrades the global consumer discretionary sector to Neutral from Underweight by shaving its Overweights in financials and techs, on firmer US housing and reflationary expectations after last month’s global monetary easing.
It keeps developed Asia-Pacific ex-Japan, which includes Singapore, at Overweight, tipping Asia as a beta beneficiary of recovering US demand led by housing and possible post-election capex.
Absent a major US fiscal-policy bargaining failure, “we expect a shift from core fixed income into equities to continue as global ‘tail risks’ are further ruled out. We therefore maintain a preference for growth-leveraged and higher-beta stocks/markets.”
Singapore plays on its global stock picks are Golden Agri and Keppel.
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