BlackRock European Equity Team                               2012 Outlook for European Equities                           ...
Year 2011 in Review – Market Moves                                                                      Local Currency Ind...
Year 2011 in Review – Styles & Sector Moves                                                             MSCI Europe Sector...
Year 2011 in Review – Volatility and RiskEuropean equity market volatility 2011                                        Exp...
Europe remains under ownedAsset Allocation to Europe  20%  19%  18%  17%  16%  15%  14%  13%  12%  11%  10%    Ene-02     ...
The two sides of Europe                                         Which way out of the crisis?Source: Google images         ...
ECB is offering vital supportECB Balance sheet (EUR, Billion)                                        Growth of Balance she...
Ireland - the cost of fiscal austerityIrish GNP growth turned negative in Q3 2011                           Irish domestic...
Global leading indicators - tentative signs of recovery?                             Global Leading indicators showing ten...
Positive signs emerging for Europe’s global leading franchisesPurchasing Manager Indices (PMI’s) inflecting upwards       ...
The corporate profit cycle Earnings revisions ratio becoming less negative                        Pan-Europe and US net pr...
European valuation  Pan-Europe Price to Earnings ratio  30  25  20  15  10    5     1991             1993               19...
Equity Yield vs. bond yieldTraditional investments yields                                                                D...
Year 2012 Outlook – Key themesWhat are we emphasising in portfolios?                           What are we avoiding in por...
AppendixFOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
BlackRock European Equity Team Extensive coverage across European markets   •   Team AUM U$15.6bn as at 29 February 2011  ...
BlackRock European Equity Team: Investment process overview      Idea                                       In-Depth Compa...
FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION   16 June 2011   18
FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION1.   This material is for distributi...
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Credit suisse mexico breakfast meeting march v22012

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Presentación de Credit Suisse en un desayuno en México DF.

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Credit suisse mexico breakfast meeting march v22012

  1. 1. BlackRock European Equity Team 2012 Outlook for European Equities March 2012FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
  2. 2. Year 2011 in Review – Market Moves Local Currency Index Performance 2011 (%) NIKKEI 225 HANG SENG SWISS MARKET OMX STOCKHOLM 30• US was the outperformer amongst major markets AEX INDEX FTSE MIB £ IBEX 35• Europe outperformed emerging markets DAX 30 FRANCE CAC 40 FTSE 100 -MSCI Europe 2011 Total Return (€) -7.5% STOXX EUROPE 600 EURO STOXX 50 MEXICO IPC -MSCI Emerging Markets 2011 Total Return (€) -15.4% BRAZIL BOVESPA S&P/TSX NASDAQ• UK and Switzerland outperformed in Europe S&P 500 DOW JONES -25.00% -20.00% -15.00% -10.00% -5.00% 0.00% 5.00% 10.00%• Italy was the worst performer in Europe MSCI Europe - Tot Return Ind 150 140 130 120 110 100 A negative year except in USA 2 FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
  3. 3. Year 2011 in Review – Styles & Sector Moves MSCI Europe Sector Performance 2011 (%)•Defensives best performing sectors•Financials suffer from Euro crisis•Cyclicals suffer from worries over global growth Style/Size Index Performance 2011 (%)•Growth outperforms Value MSCI Europe Stoxx Small 200 Stoxx Mid 200•Large caps outperformed small caps Stoxx 200 Large MSCI Europe Value MSCI Europe Grow th -20 -18 -16 -14 -12 -10 -8 -6 -4 -2 0 A year of defensives, energy and non-cyclical growth 3 FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
  4. 4. Year 2011 in Review – Volatility and RiskEuropean equity market volatility 2011 Explanatory Power of the Largest Principal Component 60% of returns 80% explained by ‘Risk on, Risk off’ 70% 60% 50% 40% 30% 20% 10% 0% A year of elevated volatility dominated by the risk on/risk off tradeSource: BlackRock RQA as at March 2012 4 FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
  5. 5. Europe remains under ownedAsset Allocation to Europe 20% 19% 18% 17% 16% 15% 14% 13% 12% 11% 10% Ene-02 Jul-03 Ene-05 Jul-06 Ene-08 Jul-09 Ene-11 Global funds allocation to Cont Eur, Manager Simple (Germany, France, Spain, Italy, Greece) Average Need investor confidence to unlock valueSource: Credit Suisse December 2011 5 FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
  6. 6. The two sides of Europe Which way out of the crisis?Source: Google images 6 FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
  7. 7. ECB is offering vital supportECB Balance sheet (EUR, Billion) Growth of Balance sheets during the crisis Crisis has been averted for nowSource: Deutsche Bank February 2012, Barclays/Bloomberg March 2012 7 FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
  8. 8. Ireland - the cost of fiscal austerityIrish GNP growth turned negative in Q3 2011 Irish domestic demand continually declining since recession 10.0% 10.0% 5.0% 5.0% 0.0% 0.0% -5.0% -5.0% -10.0% -10.0% -15.0% -15.0% Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 GNP Domestic demand Nominal Irish GNP has fallen 25% since the end of 2007Source: Goodbody, as at January 2012 8 FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
  9. 9. Global leading indicators - tentative signs of recovery? Global Leading indicators showing tentative signs of recoverySource: Barclays as at February 2012, GS as at March 2012 FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION 9
  10. 10. Positive signs emerging for Europe’s global leading franchisesPurchasing Manager Indices (PMI’s) inflecting upwards MSCI Europe Geographical Revenue Exposure 2012 65 60 55 50 45 40 35 US Eurozone China 30 - 08 l-0 8 - 09 l-0 9 - 10 l-1 0 - 11 l-1 1 - 12E ne Ju E ne Ju E ne Ju E ne Ju E ne Weaker Euro benefits Europe’s international earnersSource: Barclays as at January 2012, GS as at December 2011 10 FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
  11. 11. The corporate profit cycle Earnings revisions ratio becoming less negative Pan-Europe and US net profit margins (%) 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 US Europe Potentially positive, but this is not March 2009 Source: Morgan Stanley March 2012 Credit Suisse, as at January 2012 11 FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
  12. 12. European valuation Pan-Europe Price to Earnings ratio 30 25 20 15 10 5 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Pan Europe PE Average +1Stdev -1Stdev Valuations cheap relative to history and USASource: Citigroup as at December 2011, 12 FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
  13. 13. Equity Yield vs. bond yieldTraditional investments yields Developed World Dividend Yields 8 7 6 % 5 4 3 2 1 0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Japan US Europe ex UK UK Europe offers most attractive dividend yields Source: Yield data as at 31 December 2011source Bloomberg, Societe Generale. Cash rate is UK 3M Libor. Citigroup as at December 2011 13 FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
  14. 14. Year 2012 Outlook – Key themesWhat are we emphasising in portfolios? What are we avoiding in portfolios? Quality Companies  Highly leveraged businesses - Strong balance sheet  Companies exhibiting signs of financial distress - Proven management  Large domestic peripheral earnings exposure - Reliable business model  Overvalued stocks Free Cash Flows - Dividends - Share buyback - Capital returns International Earnings - Undervalued cyclical companies - US and Emerging market exposure Non-cyclical growth Stock selection essential to navigating turbulent environment 14 FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
  15. 15. AppendixFOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
  16. 16. BlackRock European Equity Team Extensive coverage across European markets • Team AUM U$15.6bn as at 29 February 2011 • 13 sector analysts • Average 19 years experience of senior PMs Vincent Devlin Alice Gaskell Consumer / Other Financials Commercial Services Bottom-up fundamental investors with macro Michael Constantis IT – Telecoms, Stefan Gries Energy awareness Media Andreas Zoellinger Brian Hall • All Fund Managers & analysts conduct research Insurance Capital Goods/ Construction • Team produces proprietary research, not reliant on broker recommendations Nigel Bolton Head of European Equity Team • Best ideas are delivered through team debate & Real Estate collaboration Hampus Lundh • Leverage BlackRock’s Global resources Materials & Amy Dey Mining Banks Simon Hunter Alister Hibbert Autos, Tobacco, Retailing, Banks Transport Portfolio construction that builds portfolios Zehrid Osmani Cons Staples & Anne Osborne Healthcare around high conviction ideas Luxury Goods Utilities Kathleen Dickson Dugal Bain Joe Williams Laurence Gallo Product Specialist Product Specialist Product Specialist Product Specialist Highly Experienced, Rigorous Approach, Global Reach FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
  17. 17. BlackRock European Equity Team: Investment process overview Idea In-Depth Company Analysis Portfolio Generation Construction Financial ModellingTeam Sector Analysts Fundamental Analysis Sophisticated risk Screening systems to control External Research Company Recommendation Research Pipeline risks & maximise Macro/Thematic Meetings & Rating rewards Challenge Assumptions Structured, disciplined research framework 17 FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION
  18. 18. FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION 16 June 2011 18
  19. 19. FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION1. This material is for distribution only to those types of recipients as provided below and should not be relied upon by any other persons. This material is provided for informational purposes only and does not constitute a solicitation in any jurisdiction in which such solicitation is unlawful or to any person to whom it is unlawful. Moreover, it neither constitutes an offer to enter into an investment agreement with the recipient of this document nor an invitation to respond to it by making an offer to enter into an investment agreement.2. This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of yields or returns, and proposed or expected portfolio composition. Moreover, certain historical performance information of other investment vehicles or composite accounts managed by BlackRock, Inc. and/or its subsidiaries (together, “BlackRock”) has been included in this material and such performance information is presented by way of example only. No representation is made that the performance presented will be achieved, or that every assumption made in achieving, calculating or presenting either the forward-looking information or the historical performance information herein has been considered or stated in preparing this material. Any changes to assumptions that may have been made in preparing this material could have a material impact on the investment returns that are presented herein by way of example.3. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of March 2012 and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. There is no guarantee that any forecasts made will come to pass. Any investments named within this material may not necessarily be held in any accounts managed by BlackRock. Reliance upon information in this material is at the sole discretion of the reader. Past performance is no guarantee of future results.4. In the UK issued by BlackRock Investment Management (UK) Limited (authorised and regulated by the Financial Services Authority). Registered office: 33 King William Street, London, EC4R 9AS. Registered in England No. 2020394. Tel: 020 7743 3000. Tel: 020 7743 3000. For your protection, telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited.5. This document contains general information only and is not intended to represent general or specific investment advice. The information does not take into account your financial circumstances. An assessment should be made as to whether the information is appropriate for you having regard to your objectives, financial situation and needs.THIS MATERIAL IS HIGHLY CONFIDENTIAL AND IS NOT TO BE REPRODUCED OR DISTRIBUTED TO PERSONS OTHER THAN THE RECIPIENT.BlackRock® is a registered trademark of BlackRock, Inc. All other trademarks are the property of their respective owners. © 2012 BlackRock, Inc. All rights reserved. MX-0572-03/12 FOR INSTITUTIONAL AND QUALIFIED INVESTORS IN MEXICO ONLY – NOT FOR PUBLIC DISTRIBUTION 19

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