HSBC downgraded Canadian equities to Underweight from Neutral and lifted UK equities to Neutral from Underweight in a note Wednesday. They also upgraded developed Asia, excluding Japan, to overweight from Neutral.
The bank told investors that equities in Canada and Japan, alongside Financials and Health Care, look less attractive according to their analysis model.
Meanwhile, the UK is seen as providing “a good and cheap source of defensive, commodity and yield exposure,” which the bank feels could come in handy as we head into a more volatile second half of the year.
Canada’s decline in in HSBC’s eyes is driven by weak earnings momentum and its machine learning model assessment that the market has overshot what is implied by macro fundamentals over the last three months.
The bank also remains Underweight Europe, excluding the UK, as it believes European equities are grappling with a tougher economic backdrop compared to the US….
