e e UKe quitie S Preference: neutral ; FTSE 100 (24 Oct): 5,805 (last publication: 5,768) | Recommendations UBS View 7 . . RISE 790 fEmenth target): 5,850 Tactical (6 months) ° ioe our Lehi ame on ee equities. Earnings ae Se eee to Seeehone showing crak the « The UK offers. an attractive 49%. dividend weakest dynamics within our market universe. Commo ity related sectors show steep earnings declines, yield. We still like companies with high which is expected to moderate only in a lagged fashion to stabilizing commodity prices. The Healthcare wality INCeRne Streame sector suffers from company specific issues which affect earnings also negatively. . wy ie ¢ A ; nthe UK. Th ¢ With the oil price expected to trade down over the next 3 months, earnings of companies in the energy e ike Sereeer TApIES 1h “IME ae Te sector - comprising about 20% of the market - should remain depressed over the coming quarters. Within sector should provide steady earnings financials, law suits related to mis-selling of insurance related products represent a special risk factor. growth through its exposure to e Recent strengthening of the British pound is also a headwind for the competitiveness of UK companies, emerging markets. as earnings measured in the local currency are negatively affected. - = : : . Be r ic (1 2 r ¢ The PE of UK equities looks attractive at first sight. But over the past 10 years, UK equities traded on a ete ( ° ae = 4% dividend average at a discount to global equities. ne Market's Close to “vo dividen yield provides a good income stream. 4 Positive scenario FTSE 100 (6-month target): 7,000 © Companies with pricing power are ¢ A fast strengthening in global growth and recovering demand from emerging markets leads to fast rising expected to deliver superior earnings commodity prices, helping the Energy and Materials sectors to lead the market higher. The market could growth. re-rate to a P/E multiple of 13.0x, and we would expect earnings growth of 5-10% over 12 months. &