That's the message this morning from Ajay Kapur, global equity strategist at Citigroup. I tried, but I couldn’t shake his belief that we will see on a six month view:
11-15% gain for Europe/US
10-17% for Japan
5-10% for Emerging Markets
The so called 'risk; play in emerging markets is seen as the least rewarding, while on a sector basis, Ajay thinks the best return will be delivered by gearing back into U.S. and global growth. Japan is back, or will be in 2007, says Ajay, and it is the exporters that will grow.
Three risks to the good news:
Rising labour costs -- reducing profitability.
Protectionism -- leading to restrictions on global trade.
Policy errors by central banks -- the risk that the BoJ, ECB, BOE or Fed over tighten.
What about excessive leverage? Consumer indebtedness? China growth slowdown? And so on. Don’t worry, says Ajay, these things may become important negatives for markets, but not in 2007.
Just wanted to remind you about the interview with Dr. Joachim Berlenbach of Tiberius Group. We talked about the commodity markets -- Joachim thinks the opportunity is in the smaller exploration stocks. He stresses the need to differentiate within the sector, because the recent price action has shown divergence in behaviour.
His pick Sherwood Copper.
Have a good weekend. See you Monday.
Feedback welcome - here.