Pan-European:Under or Over - UK:Sector Changes

- Pan-European — Under or Over
• Recovery — Global GDP is above previous peaks. European earnings are not. Industrials and Staples have the most robust forecasts, all above trend.
• Believer or sceptic? — The market is backing sectors delivering earnings, even if above trend and de-rating those that fail to deliver. International over domestic.
- UK — Sector Changes
• Recovery biased — Our economists’ forecasts remain for an economic recovery. This should underpin earnings expectations and makes valuations supportive.
• Sector weightings — We downgrade Pharma to Underweight from Overweight and move Industrials up to Overweight. Mobile and Construction up to Neutral.
Citigroup European Portfolio Strategist 20100715

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