Trade with Greece
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Analysts point out that, although the Asian
economies’ —most importantly China’s— growth
rates are evening out to more normal levels, this
region will remain the engine of the global econo-
my. Given, indeed, that Latin America continues
to grow at satisfactory, and Europe experienced
higher-than-expected, growth rates, manufactur-
ing and industrial production are expected to be
the main drivers of growth. In regard to China,
economists believe that the greatest challenge for
the country is to avoid Japan’s fate. And this
because, the Chinese dragon is going through a
phase whose characteristics are reminiscent of
the “land of the rising sun” during the 1980s:
increasing fixed asset and, especially, real estate
prices. Further concerns are raised by the fact
that China seems reluctant to shift towards a new
growth model. That is, to move from an export-
driven to a purely consumption-driven economy.
Let’s have a look at the forecasts made by ten
major investment houses.
BNP PARIBAS
BNP Paribas expects gains for European
stocks, which, in the case of the MSCI Europe
index, are translated to a 12% price increase, or
a total return of 15%, when dividends are also
factored in.
Forecasts of a 3.8% global growth rate suffice to
support bullish tendencies in stock markets.
Commodity prices are expected to register an
average increase of 10%, which may, nonethe-
less, give rise to negative side-effects in case it is
larger, thus damaging profit margins.
Preference is shown for sectors with above-aver-
age free cash flow and relatively stable prospects
regarding free cash flow creation. There is no
specific preference among cyclical and non-cycli-
cal sectors, although the most attractive among
the former are the stocks of companies with
increased exposure to emerging markets.
Sectors strongly correlated to consumer spend-
ing, which is expected to remain at low levels in
Europe (excluding Germany, which is expected to
be the pleasant surprise), should be treated with
caution.
In the “peripheral” markets of Europe, emphasis
is placed on stocks that are expected to register
the greater gains as a result of payroll cost sav-
ings, since low valuations cannot be the sole
investment criterion.
BANK OF AMERICA
The year 2011 is expected to be a year of “mod-
erate” global GDP growth and excess liquidity,
with the US and emerging markets being the driv-
ers of stock market booms, the dollar gaining
strength, the gains from fixed income investments
remaining “moderate” and commodity prices
remaining on the rise.
Stock prices are expected to increase by 15%
worldwide, with emerging markets doing even
