DISCLOSUREAPPENDIXATTHEBACKOFTHISREPORTCONTAINSIMPORTANTDISCLOSURES,ANALYSTCERTIFICATIONS,LEGALENTITYDISCLOSUREANDTHESTATUSOFNON-USANALYSTS.USDisclosure:CreditSuissedoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethattheFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.4June2019GlobalEquityResearchInvestmentStrategyGlobalEquityStrategyResearchAnalystsAndrewGarthwaite442078836477andrew.garthwaite@credit-suisse.comRobertGriffiths442078838885robert.griffiths@credit-suisse.comNicolasWylenzek442078836480nicolas.wylenzek@credit-suisse.comMengyuanYuan442078880368mengyuan.yuan@credit-suisse.comAsimAli442078832480asim.ali@credit-suisse.comSTRATEGYRegionaloutlookThekeydriversofregionalperformanceinourvieware:i)thecycle(formingabottomnow,andlikelytorecoverinlateQ3);ii)thedollar(weexpectdownsidefromhere);andiii)thetradewar(weassumeanegotiatedresolution).Combinedwithourregionalscorecards,thispointstowardsmaintainingouroverweightsofemergingmarketsandJapan.Japanoverweight:i)Cheapvaluation(35%discountonEV/EBITDAtoglobalmarkets–closetoa10-yearlow),ii)clearcorporatechangesuggestingthediscountshouldnarrow,withbuybacksreaching5%ofmarketcap;iii)thelastmajorregionactivelyengaginginQE(ofbothequitiesandbonds).Historically,Japanhasbeenthemostsensitivemajorregiontotheglobalcycle.Europe:raisetobenchmark:i)Wethinkeconomicmomentumcouldsurpriseontheupside,withcyclicalspricinginzeroGDPgrowth;ii)investorshavecapitulated;iii)earningsrevisionsarebetterthanthoseofglobalequities;iv)weseeroomforre-leveraging,withbuybacksrising;andv)theERPremainsexcessive.Whynotoverweight?i)thesector-adjustedP/Eisononlya6%discounttotheUS;ii)grossmargins(extech)aresimilartotheUSatatimewhenwagegrowthhasbeenmuchstrongerthanexpected;andiii)Europeisveryunderweighttech.WeremainoverweightSpainandGermanyandunderweightFranceandItaly.UK:lowertobenchmark:Relativevaluationsof...
