Sector Recommendations: Capital Goods
Since the beginning of the year, the issuers in the Capital Goods sector have performed well, supported by im-proving economic fundamentals in Europe. The manufacturing sector in the euro zone is continuing to progress on the back of a strong order backlog, reflected by the manufacturing PMI reaching a six-year high of 58.1 in Sep-tember 2017 (vs 54.9 in December 2016). In addition, the European construction market is continuing to recover, with yoy euro zone construction output up 2.7% in July 2017. Companies with a strong exposure to France, such as Rexel or Loxam, are benefiting from the dynamic French construction market (+4.4% in 2017 and +3.8% in 2018 projected by Euroconstruct). Demand for Rexel’s products is also driven by the upswing in US residen-tial construction, where building permits in June were up 7.4% (vs. May) and 5.1% (vs. June 2016).
Spread Research is France's first Rating Agency, registered by ESMA (European Securities and Markets Authority) and a leading European Independent Credit Research firm, founded in 2004 and based in Lyon, France. Our experienced team offer key research services using a wide range of investment strategies and research methodologies for the High Yield, Emerging Markets, Convertibles and Loan Markets.
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