The bull run of the FTSE 100 is headed for a reality check, according to HSBC Holdings Plc.
equity strategists at the British bank predicts the benchmark in Britain will end the year down about 7 percent, reversing the current gain. They are most bearish prognosticators seven surveyed by Bloomberg, which average forecast the index will gain an advance of 0.6 percent in 2016 to 6281.
The promise of stimulus from the central bank will soon give way to harsher economic realities after voters decided to leave the European Union, said Robert Parkes, HSBC's head of European equity strategy. Economists project the country is heading towards a recession, something the Bank of England Governor Mark Carney warned as he promised to make liquidity available to contain the fallout.
"We had the good news, but we have bad news to come - the distribution Carney paracetamol before the hangover kicks," Parkes said by telephone from London . "While the FTSE has extensive international exposure, we still have to remember that he got about a third exposure to the domestic economy -. Significant "
Supported by the pound plunging, the FTSE 100 - essentially multinational producers of raw materials, medicines and banks manufacturers - has climbed 5.6 percent since the vote shock Britain to split the EU. After an initial drop, the gauge erased its losses in just four days and managed to enter a bull market last week. On Monday, it rose 7.3 percent for the year, becoming the third biggest winner among developed markets. The gauge fell 0.1 percent at 08:15 in London.
strategistsThe post-Brexit divided road that are mostly on the same page where European equities are concerned. The forecasts for the FTSE 100 are 7.1 percent of the loss of the HSBC up 6.1 percent of Natixis SA. Yet each of them - even HSBC - agree that the index is better include the actions of Europe that
Investors and analysts have cited the book falling as a reason to embrace exporters large cap index, which they say offer. security and better profits during a period of uncertainty. Analysts have dampened projections for declines in earnings in FTSE 100 companies in 2016, calling for a contraction of 4.7 percent, compared with a drop of 8.5 percent in June 24.
Parkes said international exhibition of the FTSE 100 helped beat peers in recent weeks, and the bank is overweight UK equities. But he expects fears of a recession on the rise in the second half 2016 data showing the impact of the outcome of the vote become available, weighing on stock prices and earnings projections. For an indication of where the economy is going U.K., Parkes said most domestic FTSE 250 index, down 2.7 percent from the day of the referendum. EY club forecaster Point sees a recession at the turn of the year.
"Being overweight does not necessarily mean that you are buying," said Parkes. "It's more if you need to be in European equities, where should you go? We think the UK market will decline less than Europe this year, but it will go down. "
HSBC sees the Euro Stoxx 50 lost 22 percent this year, the most bearish forecasts in a Bloomberg survey of strategists this month.
BOE said the last week he needs more time to assess how Brexit has dented the economic prospects of the country, to keep rates unchanged, but signaling it is preparing stimulus for the next month. Its quarterly report on inflation is due on 4 August and will include new estimates for growth and inflation as well as the first full decision of the monetary policy Committee on how the referendum is set to affect the UK
data Less widely followed as the figures for consumer confidence GfK - which tumbled the most in 21 years after the referendum - already report the reality check that is due for UK stocks on the rest of the year, Parkes said. Business confidence also sank, according to figures earlier this month and a Deloitte LLP survey released Monday
"There is a lot of hope built in the UK share prices currently -. Hope on economic growth and hope politically, "said Parkes." There is an unprecedented level of uncertainty on these two issues. U.K. shares, including the FTSE 100, are for a bumpy ride in the months ahead -. in a downward direction "
Bloomberg
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