Always a good question: what’s priced in?

And the answer from Barclays:

« While valuations are certainly not pricing in a full-blown global recession, we are not far away from pricing a 2012-style moderate recession. If such a scenario were to fully materialise, the fundamental floor appears to us to be a STOXX 600 level of 300 (c. 10% below today’s levels). However, if a more benign economic scenario were to occur, as per our economic team’s forecasts, we expect valuations to eventually revert higher. Till further evidence of this materializes, in the near-term, we expect markets to remain volatile and follow economic and political developments. »

Further in the report, Barclays’ strategists write:

« European market valuations measured on either the Price/Book ratio or the Cyclically-adjusted P/E ratio are certainly not near the lows seen during the financial crisis. Therefore while a severe global recession is not priced-in, multiples on both counts are near the average levels seen during the sovereign debt crisis. This suggests to us that investors are not far away from fully pricing in a mild-recessionary outcome. A further 10% correction would bring valuations back to sovereign debt crisis lows, suggesting that the fundamental floor in a mild-recessionary scenario is at a STOXX 600 level of 300. »

barclays European Equities valuation ratios

Les commentaires sont fermés.