Investors falling out of love with market darlings

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Belgique Nouvelles Nouvelles

Belgique Dernières Nouvelles,Belgique Actualités

The strong run in food-and-drinks stocks created an extreme valuation gap against beaten-down sectors like banks, when earnings started to disappoint.

AB InBev also cut its forecast on Friday. The valuation gap between the sectors in terms of 12-month forward price-to-earnings ratios narrowed from 2.9 to 2.3 since mid-September, but is still far from its 10-year average of 1.8.

With no improvement in PMIs and with the ECB highlighting the downside risks to the economic outlook, some reversal is still possible. The issue then is whether the market move is pricing in too much hope. Citi economists say asset valuations have now incorporated market expectations for further policy easing.

 

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Belgique Dernières Nouvelles, Belgique Actualités