Their courses have even lost more than 20 The remuneration of managers must be capped It is in our interest but also that of the RussiansAnd yet the dollar appreciates as a well rare4 in 2005 some economists saw a finish 35 hoursAll play today with the codes of the sportThis time a global cooperation is neededBerlin pushes the purchasewith des cleanvehiclesThe task is immense but the path is narrowStock markets are still in hue and to diaAfter sanded the champagne last year, professionals in the markets appear still relatively confident for 2007. Most makers expect a good vintage on European equity markets: forecasts vary broadly from a little less than 7 to slightly more than 10.
The year should however be less good. In 2006, the expectations were significantly exceeded with a growth of 18 for the DJ Stoxx 600 and ranging progressions of approximately 11 to 32 for the major European indices.
In fact, most of the estimates for 2007 appear globally in line with the growth of profits. It is expected around 8.2 for the DJ Stoxx 600 companies according to data from Thomson Financial in mid-December. The pace will be thus less argued in 2006 ( 13.3), which worries some experts.
Thus, for Groupama AM, markets could CAP, especially faced with "a deceleration of the profitability of listed companies with the first relative disappointments announced four years". In addition, "the restructuring is completed, the profits are more sensitive to the macroeconomic environment." "Impact on the dollar, on raw or economic growth, expected profits won't meet", says Christophe Donay, Director of economic research and Kepler Equities investment strategy.
Deceleration of growth
Forecasters agree to recognize that the context will be less carrier. If fears of a sharp slowdown in the US economy appear to be to be distant and the latest figures on the real estate argue instead for a smooth landing, the pace of GDP growth will decelerate in Western countries.
Estimates although only relatively variable revolves around 2.3 growth in the United States (after 3.3 in 2006) and 1.9 in euro area (after 2.6). "Global growth will moderate in 2007, but the cycle should be well oriented." "More marked differences that in 2006 will appear between the zones and each zone", explains Patrice Gautry, an economist at Union Bank private, which evokes a slowdown scenario and then resumed in the United States.
This situation is expected to generate, for many professionals, a greater differentiation between sectors and values according to their position in the cycle. Dispersal on the Euro Stoxx 50 in one year (measured by the difference in performance between the values) is, for the time being, still relatively low, below average, because it is roughly 21, to end of 2006, compared to 36 since 2000.
If prudence prevails as to the conditions, most professionals however continue to show a clear preference of the shares to bonds. Grants could even surpass again the expectations in the multiple expansion.
Mergers as a catalyst
"The price-earnings of the MSCI World 2006 year-end ratio is lower that that of end of 2005, said Patrice Gautry." Now, concerns about inflation and monetary policies are more moderate. This environment could enable a multiple increase.
Scan similar to Teun Draaisma, responsible for strategy European shares of Morgan Stanley, which said that the consensus for Europe course-benefit ratio in 2007 remains about 10 less to its long-term average.
Another positive factor: mergers & acquisitions, who reached last year's record volume of 3.600 billion in announced transactions (1.363 billion in Europe), according to preliminary data from Thomson Financial. Although opinions differ on the intensity of the continuation of this trend, "reconciliations of companies will still be the main catalyst for the volatility of equity markets", note Laurent Roussel, Director Assistant of research derived from Exane.
Finally, some experts estimate that a decrease in the rate of the US Federal Reserve could be support to the awards of old Continent, even if the evolution of monetary policy should remain a factor of uncertainty in the short term.
Also, the next statistics and publications are still monitored very carefully. With tomorrow, the proceedings of the last monetary policy of the Fed Committee.
