‘Invest with Baskets' features over 40 stock baskets built for equity and multi-asset
investors. Our baskets offer strategic or tactical exposure to market themes (e.g. Oil, EM,
Forex) as well as to Style (Value, Growth and Dividend). With this report, we update our
three Style baskets according to their respective scoring/screening methodologies.
In Europe, go for stocks with domestic and EM exposure to protect from a higher
EUR/USD. Our SG Eurozone Consumer Basket should be a good hedge against a stronger
euro given its strong exposure to domestic cyclical consumption (p.38). Take advantage of
higher EM growth and don’t be fooled by the euro’s 15% appreciation against the USD in
the past 12 months – the trade-weighted euro is only up 6% yoy. For the EM exposure, we
favour our SG Dragon (p.49), SG Brazil-related (p.50), and SG Russia-related (p.51) baskets.
Go for Value with our SG Best Value Basket The improvement in global economic
momentum offers strong support for cyclical sectors, while higher inflation and ECB policy
normalisation should send bond yields higher. In this environment, we expect Value to
continue to outperform Growth in Europe, and recommend our SG Best Value Basket
(+4.5% vs Stoxx 600 +3.5% ytd). For the new composition of our basket, see page 7.
Long/short baskets continue to pay off on Brexit In March 2015, we created two
stock selections that could prove resilient (‘Brexit+’) or suffer (‘Brexit-’) in a Brexit scenario
(link). We expect our strategy to continue to perform well as Brexit negotiations accelerate.
In Asia, protect from Japanese yen strengthening with our SG Japan Domestic
Basket Our basket is composed of stocks with less than 40% exposure to international
markets. In China, our SG China Mixed Ownership baskets offers exposure to state-owned
stocks that stand to benefit from the government’s mixed ownership reform. We also
maintain exposure to the SG Japan Capex and SG Japan Construction baskets.