• Home
  • News
  • Business
  • Nomura on opportunities for retail investors worldwide

Nomura on opportunities for retail investors worldwide

By Angela Gonzalez-Rodriguez

loading...

Scroll down to read more

Analysts at Nomura, the private bank, have recently highlighted different investment opportunities to benefit from apparel, fashion and retail recovery worldwide, from e-commerce in India to cheaper European buys.

Fraser Ramzan, an analyst at the Japanese bank, downgraded the Europe’s retail sector from ‘bullish’ to ‘neutral’ in April, noting that many of his target prices for companies in the sector “now offer little or no upside.”

In this vein, Razan recalled that the general retail sector is up 12 percent in the UK in the past six months, while Swedish fashion retailer Hennes & Mauritz AB is up 22 percent and the parent company of Zara, Spanish fashion giant Inditex SA, has improved by an even larger 27 percent.

“Although we are optimistic about the prospects for the UK consumer in 2015, with a forecast of 8 percent growth in discretionary consumption, and there are some arguments that the eurozone consumer may have found a floor, this does not necessarily translate directly into the sales of the more mature retailers,” said Ramzan, published the ‘Wall Street Journal’.

It is noteworthy that Nomura has recently raised its target price on several retailers, thanks to low bond yields contributing to a lower cost of capital, highlights the ‘WSJ’. “There is now an average upside potential of 0 percent across the group over the next 12 months, leading us to move our sector rating to neutral,” adds Ramzan.

Finally, Nomura argues that European general retail is at a 30 percent premium to the market. It also says retailers’ margins are exposed to foreign exchange pressures.

Elsewhere, Latha Venkatesh and Sonia Shenoy said in an interview with CNBC that the rally for Asian retailers or international group that operate in the region was driven by macro changes, which was leading to a private equity expansion till now, and this may continue for 6 more months. “Beyond that, the micro part, or the focus on earnings will come into play and it will become a bottoms-up market,” said Venkatesh.

He particularly advised retail investors to continue with systematic investments and said that they should look for a 16-18 percent annualised growth over five years.

H&M
Inditex
Nomura