The fear and uncertainty currently surrounding equity markets is leading investors to ignore vital fundamentals, Credit Suisse believes.
Cesar Perez, Credit Suisse Asset Management European Equities head, attributes much of the recent difficult market conditions to sentiment.
“Not only is there uncertainty surrounding global economic growth, but there are still ongoing concerns about the state of the financial sector,” he says.
“Many people are predicting that the worst of the financial sector crisis is behind us. However, while this may be the case, the problems will not disappear overnight.”
Perez says the equity sell-off has been a “global phenomenon” driven by US recession fears.
“Unfortunately, economic growth appears to be slowing globally,” he says.
“European indicators are also on a downward trend. Manufacturing data on order books and inventories has turned lower and there are also concerns about the consumer.”
However, while Credit Suisse believes volatility will be around for the foreseeable future, it says good stock pickers will find opportunities.
“We believe that valuations in European equities markets are attractive in both absolute and relative terms, and that companies in Europe remain in a very healthy position with generally low levels of gearing and strong balance sheets,” Perez says.
Credit Suisse also feels the emerging markets will remain robust. It says the sensitivity of the emerging markets to the US has been exaggerated and these economies will remain supported by strong domestic growth.
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