Groupama Asset Management sees equities retreating in the next few months, dragged down by lacklustre macro data from Europe and the United States, where the end of the Federal Reserve's quantitative easing looms. The Paris-based fund management firm, which has 95 billion euros ($136 billion) under management, sees the Europe's broad STOXX 600 at 280 points in three months, about 0.7 percent lower than on Friday.
It sees Wall Street's S&P 500 at 1,300 points, a 3.8 percent fall from its current level. "There's a battle raging between the macro and the micro," said Groupama AM Chief Investment Officer Antoine de Salins. "Overall, earnings are solid and the momentum is still positive. But equity markets remain quite fragile, with a lack of visibility, and we expect a consolidation phase over the next three months," he told Reuters.
In a context of sluggish economic growth, Groupama AM favours stocks of companies with strong brands, particularly in the auto and luxury sectors. "We look for companies that have the capacity to maintain their margins in a context of rising input costs," de Salins said, declining to name stocks.
"We also like the technology sector because we think that corporate investments in technology is poised to accelerate, especially in the United States," he said. The asset management firm remains cautious on banking stocks, as banks struggle to adjust their business model to new regulatory requirements. "We're also cautious on the banks due to their exposure to eurozone sovereign debt and on their refinancing capacity, particularly the peripheral banks," de Salins said.