Flash boursier

Key data



1° Rising growth and inflation
2° Better job market in Europe

The Handover

The year has begun on a firmer footing, with better growth and inflation expectations. One reason for the improved economic outlook is the revelry in financial markets that has accompanied Trump’s election.

The US economy will most probably be the first to enact the transition from monetary to fiscal stimulus. As in a relay race, monetary policy – which is running out of steam after a lengthy effort – is at last preparing to pass on the baton. The president-elect plans to reduce fiscal burdens and boost spending on infrastructure, meaning that it’s the right time for the Fed to shift trajectory on its monetary policy. If data on the labour market and prices put on a good show, several rate hikes ought to take place during the year.

However, minutes from the latest Fed meeting conveyed a feeling of unease regarding the incoming administration’s economic impact. The first reason put forward is that economic fundamentals have not changed, while the protectionist rhetoric of the new president is casting a cloud over the future. For now, based on statements from Ford, General Motors and United Technology, Trump seems to be producing an upswing in domestic investment.

The recovery in Europe continues, helped by steadily improving labour markets. This week, publication of euro-area statistics is likely to substantiate a moderate upturn in economy activity. Specifically, it remains to be seen whether Germany, when it reports GDP data, can single-handedly hoist Europe out of its pedestrian growth trend. At the same time, the ECB is unlikely to change policy.

China looks set to continue having to contend with the challenges resulting from its policy to place growth on a more orthodox footing. Following the depreciation in the Chinese currency, we will need to keep an eye on its monetary reserves.

In conclusion, this new environment is likely to be supportive to equities. However, the economic climate this year will depend on the direction of US policy as regards security and in the diplomatic field. And with elections looming all over Europe, the ability of politicians to counter populist trends will be crucial.

Adecco (ISIN: CH0012138605, price: CHF 69.40)

After a tough first half-year, the share price of the Zurich-based staffing group ended the year outperforming the SMI.

As a reminder, the share price had staged a sharp correction in the wake of the Brexit win, briefly hitting a low of CHF 45.

After that, the news was good, enabling Adecco to make up lost ground and end the year 3% higher.

Improving economic conditions suggest possible 5% growth in earnings per share on average in 2017 and 2018.

We also expect buybacks to be announced, which would provide support to the share price.

Adecco’s multiples are lower than for the sector, while dividend yield is close to 3.5%.

Buy based on a target price of CHF 75.

Alibaba (ISIN: US01609W1027, price: USD 93.89)

The Chinese online behemoth has continued diversifying. In search of new sources of growth, Alibaba will invest CNY 50bn (EUR 6.8bn) in its media and entertainment division over the next three years.

The group also recently signed a deal with Amblin, Steven Spielberg’s production company, covering the production and broadcasting of films.

In latest quarterlies, revenue in this division shot up by 300% relative to the previous year following the acquisition of Youku Tudou, a video-streaming site, in November 2015 for USD 4.8bn.

The group’s target is to reduce the revenue contribution of e-commerce to 50% from 73% at the moment, by surfing the uptrend in the media and entertainment industry.

We think that the current price is a good level for buying in from a medium-term standpoint.

Buy based on a target price of USD 120.

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