ECONOMY

In Brief

Equities strategists upbeat on 2011; see 12 pct rise European equities will climb 12 percent through the end of next year, beating 2010’s gains, as rising earnings and record-low interest rates help companies overcome the sovereign debt crisis, a Bloomberg survey of 13 strategists shows. Goldman Sachs Group Inc, the most bullish forecaster, says the Stoxx Europe 600 Index will rally 20 percent because profits may expand twice as fast as the 14 percent average rate in more than 26,000 analyst estimates compiled by Bloomberg. Bayerische Motoren Werke AG (BMW) and WPP Plc, the world’s biggest advertising company, may boost income by an average 18 percent next year, according to data compiled by Bloomberg. «People have issues with continued earnings growth and our view is don’t be surprised if profit margins continue to expand,» said JPMorgan Chase & Co’s London-based strategist Mislav Matejka, who predicts European stocks will climb 12 percent by the end of 2011. «We think the pace of earnings growth expected by analysts could actually be too low.» Companies in Europe are expanding even as concern mounts that the region’s weakest economies will struggle to fund deficits. BMW in Munich, the world’s biggest maker of luxury cars, said November 23 it will shorten Christmas breaks at factories because of increasing demand for new models. Dublin-based WPP reported third-quarter revenue in October that topped analyst estimates as advertising recovered. (Bloomberg) Bulgarian banks could be set to boost lending Bulgarian banks may cut the interest they charge clients and boost lending as the European Union’s poorest country emerges from the deepest recession in more than a decade, Raiffeisen Bank International AG said. «If in 2009 and part of 2010 we saw the glass as half-empty, now is the time to look at it the other way around as half-full,» Momchil Andreev, executive director of Raiffeisenbank’s Bulgarian subsidiary, said in an interview in Sofia yesterday. Rising exports will boost the country’s economic growth to 3.6 percent in 2011 from 0.7 percent this year, according to government projections. The bank’s economic growth estimate for next year is 3 percent, which will help boost assets and lending growth «at a faster pace than this,» Andreev said. Raiffeisen is Eastern Europe’s third-largest lender by assets. Bulgaria, the poorest EU country in terms of per capita gross domestic product, is emerging from its deepest economic slump in 12 years after a three-year lending boom stalled and foreign investment dried up. The economy grew 0.5 percent in the third quarter from a year earlier, the first annual increase after six quarters of contraction. Declining interest on deposits, which was «extremely high,» and improvement in the country’s credit quality enabled Raiffeisenbank Bulgaria EAD to cut the cost of lending by half a percentage point to 5.9 percent on euro loans and 7.5 percent on lev loans, Andreev said. The level of nonperforming loans in the country will start declining in the course of 2011 as bank portfolios expand, he said. (Bloomberg) Industrial output Greek industrial output fell 4.2 percent year-on-year in October with manufacturing production shrinking 1.8 percent, data from the Hellenic Statistical Authority (ELSTAT) showed yesterday. «Industrial output declined at a slower pace compared to the previous month as a result of recovering export sectors – base metals, chemicals, pharmaceuticals and beverages. This recovery implies improved demand from abroad, which helps to partly offset the continuing negative impact from weak domestic demand,» said Nikos Magginas, economist at National Bank. «Leading indicators point to a stabilizing trend in industrial output in the last months of the year, which again will be based on the sustainability of demand from abroad. Domestic demand is seen declining up until the first quarter of next year, at least.» (Reuters)