Previous U.S. equity barometers

Barometer of European interest in U.S. equities

October 2011



During the last two weeks of October 2011 Phoenix-IR researched the views of 82 leading institutions based in nine European countries (UK, Switzerland, France, Germany, Belgium, Ireland, Italy, Netherlands and Sweden) managing total assets in excess of $3,000 billion. The results are perhaps surprisingly positive given market conditions. It appears that European investors see the recent market weakness as an opportunity to buy more U.S. equities and they seem to have an optimistic outlook for the next 12 months.
What do you think of the current valuation of the S&P 500?
  • Following market falls in October, European investors see much more value in the S&P 500 than last quarter
  • What's interesting is that the proportion seeing the market as both undervalued and overvalued has risen
  • 42% see the market as undervalued and 15% believe the market is overvalued
  • The proportion of investors believing the market to be fairly valued has fallen from 68% to 43%
  • A net 28% see the S&P 500 as undervalued, a jump from 18% last quarter
What is your current weighting to U.S. Equities?
  • Investors saw the October weakness as an opportunity to get off their neutral fences and increase weightings to U.S. equities in the last quarter
  • The proportion of investors overweight the market is at highest point since September 2009
  • 39% of investors are neutral, 39% overweight and 22% underweight
  • The net overweight has increased from 11% to 17%
Over the next 12 months, do you intend to change your weighting to U.S. Equities?
  • Sentiment remains positive for the next 12 months
  • Although most investors remain in the "no change" camp, this proportion has fallen once again
  • Buying interest remains strong as it was last quarter
  • Selling intentions have risen very slightly from 4% to 7%
  • A net 32% of investors intend to increase their weighting over the next 12 months
What are your current U.S. sector allocations?
  • Technology is the most popular sector again, but only just
  • Continued improvement in Health Care move it up into second place
  • Industrials and Energy remain popular overweights
  • Consumer Staples remains unchanged with slight overweight
  • Materials falls below the line into underweight territory
  • Consumer Discretionary positioning improves but still slightly underweight
  • Utilities, Telecoms and Financial are clearly the most unpopular
What is your current view on U.S. sector valuations?
  • Spread between most overvalued and most undervalued narrows
  • Consumer Staples becomes most overvalued sector
  • Utilities, Consumer Discretionary and Telecoms are also seen as overvalued
  • Industrials moves from being slightly undervalued to slightly overvalued
  • Technology, Energy, Health Care and Materials seen as most undervalued
  • Financials switches from being overvalued to undervalued
Over the next 12 months, how do you expect the U.S. dollar to perform?
  • Europeans are still bullish on the US dollar although slightly less so than last quarter
  • Positive stance in place for last 18 months
  • 50% expect the dollar to appreciate and 29% expect it to depreciate
  • On balance 21% of investors expect the dollar to be higher in 12 months time
Market expectations for corporate earnings for the next 12 months?
  • As already reported in the last two quarters, a majority of investors believe earnings expectations for the next 12 months are too high
How would you describe your current cash position?
  • Cash positions have risen with 50% saying they are above normal
  • Net % higher than normal has increased from 40% to 52%, the highest level in three years
Where do you think the S&P 500 will end the year?
  • Not surprisingly, expectations for the S&P 500 have pulled back significantly from last quarter
  • Only 13% now believe the market will end the year above 1,300. Back in January 62% targeted 1,300- 1,400 and last quarter it was 54%
  • 55% now believe the market will remain in the 1,200-1,300 range between now and December 31
  • 32% see a risk that the market will end the year below 1,200
What is the average holding period of stocks in your portfolio?

What is the Active Share Ratio of your portfolio?


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