Edison Investment Research

Alphabet – Great thrall of India

Africa warning as India falls into Google’s thrall.

Valuations trump noisy narratives: increased caution on global equities

Price/book valuations point to sub-par equity returns over the next 12m

Judging only by current equity market valuations, global equity investors are significantly more likely than usual to achieve only below average returns over the next 12 months, if prior correlations remain a guide to the future. Average price/book multiples for world equities are once again at peak levels, similar to those prevailing in 2007 and 2000, and this is reinforced by a similar picture for P/E ratios. We believe investors should factor in the possibility that broad equity market exposure may result in weak or negative returns and stock-pickers cannot rely on a tailwind of benign markets over the next 12m.

Market Commentary - Housing, Infrastructure, Construction and Services 9th January 2017

Directly relevant news this morning from sector companies includes an update from MJ Gleeson, the unexpected departure of Bovis Homes CEO David Ritchie and contractor Styles and Wood (S&W) acquiring a small consultancy for £4m. Announcements on trading come fast this week with Galliford Try tomorrow, Taylor Wimpey on Wednesday, Barratt Developments on Thursday and SIG and Grafton on Friday; all according to The Times.

Market Commentary - Housing, Infrastructure, Construction and Services 6th January 2017

There is no directly relevant news this morning from sector companies.The positive news from Persimmon yesterday gave a boost to the all of housebuilders and its stock rose 7%. There is a lot of activity in the social housing arena that is worthy of attention. Subsidies into the housing sector are increasing and will impact further on quoted stocks

Do we need another Strategic Defence and Security Review?

UK Armed Forces have secretly begun preparing for another round of defence cuts

In last July’s blog ‘Can aerospace & defence weather Brexit?’  I wrote that the economic and political impact of the UK’s decision to leave the UK would require a new Strategic Defence and Security Review (SDSR). This has proved wrong thus far; Theresa May has maintained that the strategy remains intact and therefore the 2015 SDSR is extant and fit for purpose. However, press reports over Christmas that the UK Armed Forces have secretly begun preparing for another round of defence cuts suggest that my prediction may yet come true.

European Assets Trust declares dividend for 2017

Fund pays distributions equal to 6% of year-end net asset value

European Assets Trust (EAT) has today declared its dividend for 2017. The fund has a policy of making distributions equal to 6% of year-end net asset value (in euros), paid in three instalments at the end of January, May and August.

RFM 2017 – Top 5.

Artificial Intelligence.
  AI is likely to be the most important theme in the technology sector this year.
  This is because AI could become a major differentiator in determining which Digital Life services are the best and therefore preferred and paid for by consumers.

Market Commentary - Housing, Infrastructure, Construction and Services -5th January 2017

Costain and Persimmon have released updates today.Sector stock moves show little sense of direction at present. Costain is one of our “picks” as a stock that is potentially considerably undervalued that could perform very well this year. The news from Persimmon suggests that the housebuilders finished the year well but are starting to pinch themselves a little as conditions rarely remain so good for so long.

Market Commentary - Housing, Infrastructure, Construction and Services

Carillion has started the year with the announcement of a contract award in JV with Al Futtaim (its long term partner in the Middle East) worth £160m.  The sudden departure of Richard Cousins (CEO of Compass) from the SID role at Tesco, announced yesterday, has received some press comment. We concur with the view that it was not clear why he took it in the first place.  The best performance yesterday came from Serco which rose a further 2.1% to 146p. G4S was the back marker yesterday, down 2.2% to 230p

HERE – Pole position.

HERE is closing the gap to Google with the Chinese and Intel joining up.