17 September 2013 11:06 [Source: ICIS news]
LONDON (ICIS)--Stronger global economic growth is expected to favour the stock performance of industrial chemical companies over agrochemical producers, Bernstein Research said on Tuesday.
In a note to clients the research firm said that it was expecting European companies such as Air Liquide, Linde, AkzoNobel and BASF to outperform in the chemicals market for the rest of 2013 while it moved K&S, Yara and Syngenta into its underperform category.
“The economic environment is getting better for ‘industrial’ chemicals and getting worse for agrochemicals; this is our main theme for the rest of 2013 and start of 2014,” Bernstein Research said.
“We also like subsectors and companies whose earnings are relatively independent of the economic environment (eg due to restructuring or investment-driven growth). We also note the negative impact of emerging markets' currency devaluation.”
Bernstein believes that consensus estimates for volume sales growth are too low for many industrial chemical companies and too high for agrochemicals producers.
The European chemicals sector has been one of the weakest performers on European stock markets so far in 2013, largely due to the weak performance of agricultural chemical stocks.
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