Earlier this morning, we gave a rough overview of the global economy. It goes like this: Europe is rebounding, China is doing a tad better than expected, and the US continues along the same path it’s been on, which is essentially one of decent, but disappointing performance.
So here’s a perfect, practical counterpoint to that: Morgan Stanley’s European Equity Strategy team has put together 4 big investment ideas to play this world economy.
#1 Buy European Exposure
#2 Buy China Exposure vs India Exposure
#3 Buy China Consumer vs Investment Plays
#4 Cautious on Domestic UK Stocks
Some of these ideas should be intuitive.
The European economy is just starting to lift off again, so betting on Europe should do well (although European stocks have been trouncing US ones lately).
The long China vs. India is a reflection of the fact that despite all the “hard landing” hype, China’s economy looks far more stable at the moment than its BRIC counterpart.
Within China, consumer seems like the play, as the government seems willing to go down a path of “quality” growth, rather than just growth driven by investment, which has already lead to overcapacity in many sectors.
And on the UK, Morgan Stanley feels as though there’s already been too much of a run there.
Meanwhile, here’s Morgan Stanley’s list of companies with strong exposure to the Chinese consumer.
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