Mid-cap equities will be the first to recover in a market rebound according to Credit Suisse manager ...
Mid-cap equities will be the first to recover in a market rebound according to Credit Suisse manager Justin Jordan.
He said few mid-caps are in the oil and mining sector and therefore will benefit from falling oil prices. Also, there are a several travel and leisure companies in the FTSE Mid 250 that will benefit from falls in commodity prices.
“We believe that UK equities are fundamentally cheap, and the valuations of Mid 250 stocks in particular appear attractive with market ratings at multi-decade lows.
"Whilst we acknowledge that the economic outlook is uncertain, with rising unemployment and profit warnings from many companies, we believe such concerns are already reflected in valuations.”
The manager of the Credit Suisse UK Mid 250 fund added the falls in oil and metal prices have lead to lower petrol and food prices which they believe could lead to a dramatic fall in inflation in 2009.
“This will allow the MPC to aggressively cut UK interest rates in 2009, leading to a potential re-rating of UK equities from their current depressed ratings.”
To benefit from a recovery in mid-caps Jordan has positioned the fund underweight in financials and companies exposed to subdued consumer sentiment and overweight in support services and aerospace and defence.
