* Consumer exposure has outperformed corporate and EM exposure in 2015 One of the dominant themes of 2015 was the outperformance of consumer exposed stocks as the global manufacturing cycle was impacted by weaker EM / China sentiment. Reflecting this trend, our baskets of stocks with high exposure to consumer expenditure outperformed those with above average exposure to corporate expenditure and Emerging Markets in general as we show in Page 9 of the report.
* EM-exposed stocks are now seeing relative earnings upgrades while DM consumer exposure is seeing deteriorating earnings momentum Despite the continued underperformance of EM exposed stocks, relative earnings momentum across most of our EM baskets has been improving over the last 3M. As we show in the scatter charts on Page 10, most of our EM baskets are now seeing relative earnings upgrades with improving momentum (i.e. the baskets in the top right quadrant of the right-hand chart). On the other hand, stocks where relative earnings revisions trends are deteriorating include DM consumer, domestic UK, Eurozone exposure and stronger $ beneficiaries baskets.
* China consumer / Corporate exposure are the cheapest baskets on relative N12M PE vs history; DM consumer the most expensive The cheapest baskets in the market on 12m forward PE versus its 8Y history include China / EM consumer and corporate exposure. On relative trailing PBV vs its own history, Russia and US exposure screen as the cheapest baskets. The most expensive baskets on the other hand on 12m forward PE %tile include China investment, DM consumer and weaker EUR beneficiaries and US consumer, Eurozone and stronger $ beneficiaries on relative trailing PBV.