Nomura i morse - gör upp med negativismen kring Grekland:
There is little doubt that the fiscal crisis in Greece has had a major impact on financial markets this year – an impact completely out of proportion to the country’s weighting in either the European economy, or its financial markets.
Last week’s announced austerity measures should bring forth more tangible support for Greece from the EU, while a successful bond auction helps too.
The feared contagion effect has not materialised, with all other Euro Area countries now able to finance themselves at or below five-year average yields.
Meanwhile, corporate yields – financial and non-financial – have continued their relentless decline, and Europe’s companies can now borrow as cheaply as they could in 2006/07.
Surprisingly, given these improvements, Europe’s stock markets continue to reflect sovereign concerns. National valuations are strongly influenced by fiscal considerations, while the underperformance of Euro Area banks stands in contrast to the strong performance of their US and some UK peers.
Financials also look lowly priced relative to cyclical stocks, yet European GDP growth remains closely tied to bank lending. It is hard to imagine an economic recovery strong enough to justify the cyclical multiples, without an improved lending environment.
Accordingly, as European stock markets recover from their sovereign induced problems, we would expect the Financials to outperform – we remain overweight in both Banks and Insurance companies.