Regional Equity Strategy
We are up 1.5% on our bullish Spanish small caps view since it was entered in our asset class strategy on January 9 (played through the IBEXS index), and see potential for further gains over the next few months, due to an attractive technical picture and the index's exposure to improving eurozone demand.
With valuations on Turkey's Borsa Istanbul equity index at multi-year lows, we see the potential for a short-term rally. However, we believe the trend will remain one of weakness over the coming months due to a confluence of macroeconomic and political risk in 2014.
Our eurozone over US stocks view (played via the ratio of MSCI US to MSCI EMU) has performed well in recent trading on the back of a more pronounced retracement in US markets. Although up only 2.4% since initiation in August last year, we believe the recovery in eurozone growth in H114 will help bring eurozone stock valuations towards US levels.
|Potential For Bullish Break, Although Business Environment Concerns Linger|
|Hungary - BUX Equity Index, Daily (LHS) and Monthly (RHS)|