U.K. Stocks Cut to ‘Underweight’ by Credit Suisse Strategists
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By Adam Haigh
Dec. 4 (Bloomberg) -- The U.K. may face a “government funding crisis” next year, according to Credit Suisse Group AG equity strategists who cut U.K. stocks to “underweight.”
The benchmark FTSE 100 Index may rise as high as 5,750 by the middle of 2010 before dropping to 5,300 by year-end, the bank forecast. Credit Suisse lowered its stance on U.K. equities from a “small overweight” to “underweight” within a global stocks portfolio, the team of strategists led by London-based Andrew Garthwaite wrote.
The FTSE 100 has rebounded 51 percent from this year’s low on March 3, closing at 5,313 yesterday, as governments committed about $12 trillion and central banks cut interest rates to record lows to end the first global recession since World War II and revive credit markets. The global economy may expand 1.9 percent next year and 2.5 percent in 2011, the Organization for Economic Cooperation and Development said on Nov. 19.
“The sector composition of the stock market is skewed towards defensives -- and thus the U.K. tends to underperform when the OECD lead indicators rise,” Garthwaite wrote in the note. “Relative earnings have peaked and the U.K. looks overbought compared to other markets.”
To contact the reporter responsible for this story: Adam Haigh in London at ahaigh1@bloomberg.net
Last Updated: December 4, 2009 04:16 EST
