Global Equity Strategy: The Consumer - Be Selective

UBS advises a highly selective approach to global consumer stocks, turning cautious on Europe and low-end US consumers while favoring China property-driven plays, luxury, and budget airlines.

Key Takeaways

• 1.The European consumer faces a 1%+ hit to consumption due to rising oil, gas, food, and interest rates, despite offsets from excess savings.
• 2.UBS is bullish on the China consumer, driven by a recovery in the property market (60% of household wealth) and the end of deflation.
• 3.Underweight Global Autos due to lack of valuation appeal, structural headwinds from Chinese competition, and rising legacy/EV transition costs.

Table of Contents

• The Consumer: be highly selective.
• The European consumer...mounting headwinds
• Other headwinds for the European consumer stocks:
• Where are the pockets of value:
• China consumer
• Spain – a port on a storm in Europe for the consumer.
• Underweight global Autos.
• Low-end US consumer looks set to disappoint
• Screens
• Appendix
• Valuation Method and Risk Statement
• Required Disclosures

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