05 January 2016 at 10:34 GMT
- Alpha Picks list updated to encompass APAC, EM stocks
- We remain negative on the global energy sector for 2016
- APAC bulls should look to Japan over the coming months
Our 2016 equities forecast is built upon an energy-bearish outlook. Photo: iStock
By Peter Garnry
As promised back in 2015, we have updated our global equity model to include Asia-Pacific and emerging market equities. The new publication now features our alpha picks across global equities – North America, Europe, APAC, and EM (see attached PDF).
Looking at our list, the dominant theme is "long everything that is benefiting from lower oil prices": refiners, automobile producers, airlines, and consumer stocks.
Another interesting observation is that no EM equities are to be found on the list due to weak momentum and declining profitability. Asian stocks are near-totally represented by Japan, including shares such as Fuji Heavy Industries, Japan Airlines, and Nissan Motors.
Despite our negative view on energy in 2016 we did hedge our bet somewhat yesterday by going long CNOOC which is on our global alpha picks list. The Chinese oil exploration and production company is very attractively valued and has cut capex aggressively. The firm is very diversified and we believe it is a less risky way to get some long exposure in energy should oil dynamics change over the coming quarters.
CNOOC weekly share price since 2011:
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Source: Saxo Bank
— Edited by Michael McKenna
Peter Garnry is head of equity strategy at Saxo Bank