SocGen Thinks Bull Market Won't End Until 2017?

• Société Générale’s Patrick Legland said that global equities could enjoy another bright year.
• Legland expects S&P 500 to underperform, while citing CAC40 and FTSE MIB as the favorites.

Analyst Patrick Legland said that the current bull market is unlikely to end before 2H17. Global equities are poised to benefit from improved growth prospects, such as acceleration in US growth, recovery in Europe and a softer landing in China. Moreover, they should be able to absorb the Fed tightening cycle next year.

Legland believes that the US equity market would be flat in 2016, albeit with some volatility just before the Presidential election. He added that the market would significantly underperform other major equity indices.

“Higher bond yields, a stronger US dollar and higher wages would be headwinds for US stocks, which would lose their appeal,” the analyst stated, while adding that US industrials could be “particularly at risk.”

The Eurostoxx 50 is expected to rise by more than 15 percent by yearend 2016. Eurozone earnings growth could accelerate. “The index would benefit from further recovery in the euro area and more quantitative easing from the ECB,” the Société Générale report stated.

Legland said that the French and Italian equity markets were preferred to others, and they can be expected to remain attractive despite their strong performances in 2015. CAC40 and FTSE MIB can be expected to outperform the German DAX, which could come under pressure due to higher wages.