For the analysts consulted “the only defensive sector we favor remains telecommunications“, for which they maintain an “overweight” advice
As they explain, right now the sentiment among investors “is clearly cautiouswhich is usually a good contrarian indicator”. “There has been some reduction in positioning” to equities in portfolios, but JP Morgan believes that Equity vs. Credit and Bond Yields ‘Provide Valuation Cushion’. And it is that “the P/E multiples are 30% lower than a year ago, a reasonable reduction.”
“The United Kingdom, the Eurozone and part of the emerging countries are cheapwhile the United States is relatively less attractive”, point out the analysts of the US bank.
These experts also point out that many describe the recent market rebound as a bear market rally, but believe that “the stabilization is most likely to be more durable”.
In fact, they appreciate that “domestic market indicators in the past month are risk-friendly as banks, consumer and commodities have outperformed, similar to the leadership that existed at the beginning of the year, before the geopolitical shock” provoked by the Russian invasion of Ukraine.
In his view, the risk-reward ratio, critical for equities, “is likely to improve as we head into the second half.”
Source: Ambito
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