H1 2019: Downgrades

European equities trade at 12.4x their 2019 earnings. These are still seen up 10% … because 2018 earnings have been downgraded by c. 4% over the last 12 months. 2019 will follow with its own set of downgrades as analysts grab the full extent of the regime change, courtesy of the Trump administration bent on seeing the world as carpet bargaining. The Q4-2018 fears that resonated across all equities certainly offer remarkable entry points for patient monies. It would pay to be a contrarian. On the governance front, AlphaValue plunged into its proprietary metrics to assess the history of independence at each of the c. 460 corporates currently under coverage. The findings are not pleasant. On a sector basis, most have retreated on a simple but essential metric: the proportion of independent directors. Over the last seven years, the proportion of independent directors in the coverage universe has retreated from 49% to 38%. We provide useful tips about selecting 38 stocks that respect their minority shareholders. Our Head of research, Pierre-Yves Gauthier, released a 40-pages investment strategy piece for H1 2019. Report available on www.alphavalue.com