Mathan Somasundaram

Bank sector: Global macro and central bank risks remain, but the downgrade cycle is mainly in the price. The yield premium and central bank easing bias suggests that banks should see support despite weakening outlook. Diversified Financials and Insurance: High leverage to equity markets will deliver when sentiment turns positive in the back half of 2016. Short to medium term risk remains high and the risk/return favours the banks. The valuation to growth and yield suggests there is more downside risk before market support. Property Trusts: Property Trusts remains the highest risk segment of the financials as it is trading at a premium to long term fair value with declining growth and ROE. The flattening yield outlook and recent relative outperformance supports moving funds from Property to Banks. The continued government policy in construction will deliver better growth for LLC despite the sector outlook. (VIEW LINK)


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