Deutsche Bank's Martini Sees Stock Gains in 2006 on Takeovers
Dec. 9 (Bloomberg) -- Klaus Martini, who oversees $300 billion as chief investment officer for private clients at Deutsche Bank AG, expects European stocks to rise in 2006 on prospects for mergers and acquisitions and higher profits.
``Next year will be an M&A year,'' said Martini, 48, at a press conference in Frankfurt yesterday. ``Companies will have to seek acquisitions to strengthen revenue growth.''
Rio Tinto Group, the world's third-largest mining company, and Deutsche Post AG, Europe's biggest postal service, were among stocks that investors should buy, according to Deutsche Bank. Royal Philips Electronics NV, Europe's largest consumer electronics maker, was also on the list of top picks.
The Dow Jones Stoxx 50 Index, a measure tracking shares of Europe's biggest companies, will climb to 3800 in the next 12 months, Martini said. The gain is equivalent to a 13 percent increase from yesterday's closing value.
Germany's DAX Index will reach 5800 in the same period, he said. The forecast is 9.7 percent higher than yesterday's close.
The Stoxx 50 has surged 21 percent this year, headed for the biggest annual gain in six, on the outlook for takeovers and earnings growth.
European companies have spent $833 billion buying businesses this year, the most since 2000, according to data compiled by Bloomberg. Corporate profits may rise 25 percent this year, more than double the rate predicted in January, according to analysts' estimates compiled by FactSet Research Systems Inc.
The DAX has climbed 24 percent in 2005, poised for its steepest increase since 2003.
`Surprise Positively'
Earnings in Europe will rise as much as 12 percent in 2006, helped by economic expansion, according to Deutsche Bank.
``European economic growth could surprise positively next year,'' said Helmut Kaiser, chief investment strategist at Deutsche Bank's private banking unit. ``Inflation remains under control,'' limiting the need for higher interest rates, he said.
Shares of London-based Rio Tinto have soared 62 percent in 2005, while Bonn-based Deutsche Post's stock has gained 14 percent. Philips, based in Amsterdam, has climbed 26 percent in the period.
Japanese equities remain ``our favorite'' because of rising domestic demand, according to Martini. ``Japan has enormous growth potential,'' he said.
Japan's Nikkei 225 Stock Average has jumped 32 percent this year, touching a five-year high on Dec. 5. Japan's economy, the world's second-biggest, expanded at a 1.7 percent pace last quarter, fueling the longest period of growth in eight years, the Cabinet Office said on Nov. 11.
`Focusing' on Asia
Asia will have an increasing influence on economies worldwide, according to Martini. ``We're focusing more closely on Asia,'' he said.
His Balanced Muster so-called model portfolio has a holding in Asian shares that exceeds the weighting in stock indexes. It's the biggest bet in the fund, he said.
Martini has worked at Deutsche Bank, Germany's biggest lender, for more than 20 years and was appointed global chief investment officer in 2002.
Martini on June 23 said he prefers stocks to bonds in Europe because a drop in yields for debt securities has made dividends more attractive.
The Stoxx 50 has climbed 9 percent since then. By contrast, the yield on the German 10-year bund, Europe's benchmark, has risen to 3.38 percent from 3.16 percent.
To contact the reporter on this story:
Chris Fournier in Frankfurt at Cfournier3@bloomberg.net.
Last Updated: December 8, 2005 19:15 EST
Dec. 9 (Bloomberg) -- Klaus Martini, who oversees $300 billion as chief investment officer for private clients at Deutsche Bank AG, expects European stocks to rise in 2006 on prospects for mergers and acquisitions and higher profits.
``Next year will be an M&A year,'' said Martini, 48, at a press conference in Frankfurt yesterday. ``Companies will have to seek acquisitions to strengthen revenue growth.''
Rio Tinto Group, the world's third-largest mining company, and Deutsche Post AG, Europe's biggest postal service, were among stocks that investors should buy, according to Deutsche Bank. Royal Philips Electronics NV, Europe's largest consumer electronics maker, was also on the list of top picks.
The Dow Jones Stoxx 50 Index, a measure tracking shares of Europe's biggest companies, will climb to 3800 in the next 12 months, Martini said. The gain is equivalent to a 13 percent increase from yesterday's closing value.
Germany's DAX Index will reach 5800 in the same period, he said. The forecast is 9.7 percent higher than yesterday's close.
The Stoxx 50 has surged 21 percent this year, headed for the biggest annual gain in six, on the outlook for takeovers and earnings growth.
European companies have spent $833 billion buying businesses this year, the most since 2000, according to data compiled by Bloomberg. Corporate profits may rise 25 percent this year, more than double the rate predicted in January, according to analysts' estimates compiled by FactSet Research Systems Inc.
The DAX has climbed 24 percent in 2005, poised for its steepest increase since 2003.
`Surprise Positively'
Earnings in Europe will rise as much as 12 percent in 2006, helped by economic expansion, according to Deutsche Bank.
``European economic growth could surprise positively next year,'' said Helmut Kaiser, chief investment strategist at Deutsche Bank's private banking unit. ``Inflation remains under control,'' limiting the need for higher interest rates, he said.
Shares of London-based Rio Tinto have soared 62 percent in 2005, while Bonn-based Deutsche Post's stock has gained 14 percent. Philips, based in Amsterdam, has climbed 26 percent in the period.
Japanese equities remain ``our favorite'' because of rising domestic demand, according to Martini. ``Japan has enormous growth potential,'' he said.
Japan's Nikkei 225 Stock Average has jumped 32 percent this year, touching a five-year high on Dec. 5. Japan's economy, the world's second-biggest, expanded at a 1.7 percent pace last quarter, fueling the longest period of growth in eight years, the Cabinet Office said on Nov. 11.
`Focusing' on Asia
Asia will have an increasing influence on economies worldwide, according to Martini. ``We're focusing more closely on Asia,'' he said.
His Balanced Muster so-called model portfolio has a holding in Asian shares that exceeds the weighting in stock indexes. It's the biggest bet in the fund, he said.
Martini has worked at Deutsche Bank, Germany's biggest lender, for more than 20 years and was appointed global chief investment officer in 2002.
Martini on June 23 said he prefers stocks to bonds in Europe because a drop in yields for debt securities has made dividends more attractive.
The Stoxx 50 has climbed 9 percent since then. By contrast, the yield on the German 10-year bund, Europe's benchmark, has risen to 3.38 percent from 3.16 percent.
To contact the reporter on this story:
Chris Fournier in Frankfurt at Cfournier3@bloomberg.net.
Last Updated: December 8, 2005 19:15 EST
