Salient to Investors:
Martin Connaghan at Aberdeen Asset Mgmt said:
- Buying industrial stocks with stable revenue and selling health-care stocks as uncertainty about the global economy has caused cyclicals to lag pharma and other defensive stocks by a margin that is too wide to ignore. The outlook for cyclical stocks won’t necessarily change in the immediate future, but there is a lot of bad news and low expectations.
- Some industrials such as elevator and escalator makers have stable income from contracts that make them less sensitive to global growth.
- Some industrials are not as cyclical as they appear at first glance if you look at their revenues, because there is always a base level of income and revenues coming from areas that are more stable, regardless of the economic environment.
Worldwide industrial shares are trading near the lowest valuation relative to health-care stocks in more than a decade.
The MSCI World Industrials Index trades at 18 x earnings versus 22 x for the global health-care index, the widest margin since October 2002.
US ETFs tracking health-care have attracted $4.3 billion in 2014 versus $530 million for industrial ETFs.
Read the full article at http://www.bloomberg.com/news/2014-09-09/aberdeen-asset-sells-health-care-to-buy-industrial-stocks.html
Click here to receive free and immediate email alerts of the latest forecasts.