Europe's car stocks rally as BAML backs autos as "contrarian" buy
19/03/2019 at 11:52
LONDON, March 19 (Reuters) - Europe's autos and suppliers index
climbed 2.4 percent on Tuesday after Bank of America Merrill Lynch
analysts recommended contrarian investors buy select carmakers after a
survey showed investors grew more bearish on the sector.
Autos fell to the 15th most favoured sector out of 19 European
sectors, from 8th in February, BAML's March fund manager survey found.
But this pessimism on the sector combined with valuations near
all-time lows make for a "very compelling" contrarian
argument for buying European carmakers, according to BAML analysts.
"After a dismal 2018 for the EU autos sector, we see pockets
of value emerging with the bright spot being the OEMs (original
equipment manufacturers), specifically German versus French,"
The STOXX 600 autos & suppliers sector index sank 28
percent in 2018, but has had a strong start to 2019 - up about 14.3
percent year-to-date. On Tuesday, it was the best performing sector in
Europe and set for its best day in a month.
BAML's top picks are Daimler , VW , Porsche , and Peugeot
owner PSA .
The auto analysts said they are more cautious on suppliers but
remain positive on tyre stocks, preferring Continental
over Valeo .
(Reporting by Helen Reid, Editing by Josephine Mason)
((Helen.Reid@thomsonreuters.com; +44 20 7542 0402;))