Andbank foresees increases of 10% for the European stock market in 2022

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From Andbank, its chief economist Alex Fusté not think that 2022 will be a bad year for bag but will not be as spectacular as it is being 2021. For the bag of the Old Continent, the prospects for the company are positive supported on recovery of employment and European recovery funds .

“2022 is a year that has earnings growth that continues, the line continues to be the issue of margins and that transfer of production, energy and labor costs, which leads us to a growth in earnings per share of 4% to 30.5 euros, with a valuation of 17 times per PER for the European stock market, which offers a potential of 10% for an average scenario “, says Marian Fernández, head of macro at Andbank Spain.

From a macro point of view, the entity anticipates that the GDP of Europe next year will be ” less dynamic than 2021″, with a forecast of 4.3% year-on-year, but that for now it does not show signs of stagnation. However, Fernández points to risks such as possible restrictions due to the omicron variant, bottlenecks in the supply chain as the uncertainty factors that could weigh down growth.

“Europe is attractive even if it is without all the brightness and intensity experienced during this year,” adds Fernández.

Regarding US equities, Fusté argues that favorable conditions should remain in the form of a cost of capital still below its profitability. “However, with EPS of $ 225 and a slight contraction of the PER (number of times the profit is collected in the share price) due to a slight increase in returns), the fair value of the S&P would be 4,500 points “, says the expert. This would be around 2% below the current price, limiting the upside margin.

All in all, the most attractive equity market for Andbank is Japan, which it gives a 7% upside potential at a “very reasonable” PER of 19 times.

One year for thematic investment
On the other hand, the firm indicates that 2022 is going to be one more year of thematic investment than of indices. “The MSCI indices are above 20% and the thematic indices between 8% -9% and in 2020 it was just the opposite. We believe that 2022 is going to be something more similar to 2020, where it is worth not having so much by geography but on winning themes, “says Fusté.

What are these themes? “Robotics, encryption, quantum computing, dividend, climate change, ecosystem restoration, health … all of these are topics that we have always had on our radar and we believe they can make sense again in 2022, especially when valuations by 2022 they no longer offer the potentials that they did in the past. “

On the other hand, the chief economist advises to focus in the first part of the year on titles less exposed to the domestic economy and more global that can save Europe’s weak position in the global energy crisis. “As it is resolved with more stable prices and more recurring and solid supplies and Europe is better, it would be necessary to move from global European titles to local European titles”, adds Fusté.

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