France a buy, Germany a sell at Credit Suisse


Germany's growth premium in comparison to Europe is shrinking, impacting 25% of Germany’s equity market revenues, says global equity strategist Andrew Garthwaite, moving to a benchmark weighting in German stocks from overweight.

He also notes the country's competitiveness and funding-cost advantages are on decline, and it has three times more export exposure to China than Europe as a whole.

German's DAX 30 Index closed -0.7% today.

German ETFs: EWG, BUND, EWGS, DBGR, GERJ, DXGE, BUNL, FGM, BUNT, GGOV, HEWG

France, on the other hand, is moved to overweight as a play on ECB launching QE. "Bond spreads are consistent with outperformance, and France stands to benefit more than Germany from any ECB easing," says Garthwaite.

P/E valuations are 5% below average, and 75% of the companies in CAC 40 have restructuring potential, he says.

Particularly cheap are the French banks: CRARY, SCGLY, BNPZY. Also looking good: Renault (RNSDF), AXA (AXAHY -1.6%), and Total (TOT -0.4%).

The CAC 40 closed -0.8% today.

French ETFs: FXE, EUO, ERO, DRR, EUFX, ULE, URR

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