Tags: Nomura | Lehman | Stocks | rally

Nomura: No Lehman Repeat, Stocks to Rally

Monday, 12 Dec 2011 08:21 AM

A major “lightning strike” in credit markets similar to the September 2008 collapse of Lehman Brothers is unlikely, despite the dangers investors seem to face right now, say the strategists at Nomura Equity Research.

“Although 2012 looks like being a challenging year from an economic and earnings growth perspective, this outlook appears to be factored into prices, a serious credit event almost certainly cannot be,” they write in the financial institution’s latest equities research report.

If no such event occurs, stocks should end 2012 “appreciably higher,” they contend. Given current share prices, global GDP growth above 2.5 percent should be “enough to support stocks.”
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And they do see at least that much growth happening. “Nomura’s Global Economics team forecast 3.2 percent global GDP growth for 2012, and 4.3 percent for 2013, with nominal growth of 6.4 percent and 7.7 percent, respectively. These growth rates, taken together, are above the average for global growth since 1981,” they write.

The clouds may be parting on the European front. Goldman Sachs is reportedly telling clients to move back into European bank stocks. It raised its recommendation to neutral from underweight, the bank told clients in a note.

On Friday, after days of meetings, the leaders of the eurozone agreed to a new intergovernmental treaty that, among other things, calls for balanced budgets and structural deficits of no more than 0.5 percent of GDP, although temporarily up to 3 percent during economic slumps.

“The new funding arrangements agreed by the European Central Bank and other central banks should significantly help the banks offset the pressures of the economic downturn in our view,” Goldman analysts wrote.

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A major lightning strike in credit markets similar to the September 2008 collapse of Lehman Brothers is unlikely, despite the dangers investors seem to face right now, say the strategists at Nomura Equity Research. Although 2012 looks like being a challenging year from...
Nomura,Lehman,Stocks,rally
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2011-21-12
Monday, 12 Dec 2011 08:21 AM
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