Consumer Staples

Dear Client, Today we are sending you a two-part Special Report prepared by my colleague Billy Zicheng Huang of our Emerging Markets Equity Sector Strategy team, entitled “A Sector Guide To A-shares”. Part I of the report was published in September, and emphasized the key takeaways from MSCI…

Last week, Wal-Mart (WMT) surprised the market with exceptionally strong results, notably the 50% surge in online sales which followed a similar number the quarter before. The soaring internet sales are the culmination of a strategy to build up the infrastructure to compete online with Amazon, a…

Highlights Broad Chinese equity market performance since last month's Party Congress is consistent with our view that the pace of reforms over the coming year will not cause a meaningful deceleration in China's industrial sector. Stay overweight Chinese stocks. After accounting for…

The S&P household products index story in 2014-15 was that a firm U.S. dollar had sapped top-line growth from the key export market and a turnaround in the former would provide a lift in the latter. While that thesis has proven correct (second panel) and consumer goods exports have…

This week has seen the beleaguered packaged foods index finally catch a bid, driven by exceptional earnings at two of the larger constituents, MDLZ and K. Both highlighted organic volume growth and a better pricing backdrop as the key drivers of top line outperformance. This corroborates with…

Underweight This summer, we downgraded the S&P soft drinks index to underweight based on a collapse in beverage shipments and its high correlation with relative performance. That decline has since accelerated but even lower volumes have not been enough to reverse the industry's price…

Overweight This year has been a tough one so far for the S&P packaged foods index. A relative decline in stock prices seems counterintuitive in the context of a surge in manufacturers' shipments and pricing power pulling out of deflation (second panel), despite intense price…

Neutral Wal-Mart's (WMT) second quarter earnings provided some insight into a retail landscape that is in the midst of upheaval at the hands of Amazon. While a still-strong consumer (second panel) helped drive a 1.8% same-store sales increase, the real story was the 60% surge in online sales.…

Negative relative sales growth at retail drug stores has caused the S&P retail drug store index to underperform (top and second panels). However, the second derivative of the decline has turned positive, troughing early this year, but the sector's share of the consumer's wallet has barely…

Highlights Key Portfolio Updates Synchronized global economic growth is driving real yields higher and boosting equities (Chart 1). Meantime, core inflation remains muted which will ensure that Fed policy stays sufficiently accommodative (Chart 2). Outside of the U.S., monetary tightening…