Experts tip food retail and utility shares

By MoneyhighStreet Staff. Published on May 22, 2008 This post currently has no comments.

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Analysts have suggested that UK investors will continue to put their funds into food retail and utility shares.

In an article for the Reuters news agency, a number of analysts said that the current global economic situation meant that investors were increasingly looking to these sectors to guarantee returns.

Ronan Carr, a European equity strategist at Morgan Stanley, explained that it was these sectors that were currently driving inflation across the globe.

He told Reuters: “What we”ve found historically in inflationary periods and especially in stagflationary periods, is you want to be in sectors that are the source of inflation, or which have inflationary pricing or decent pricing power.”

Stephen Pope, head of equity research at Cantor Fitzgerald, echoed these opinions, explaining that rising fuel and food prices meant that consumers had less spare income to spend on luxuries.

“The money they have over for joyful disposable, pleasurable things is somewhat limited. So anything that interfaces with the general consumer is going to have difficulties,” he added to the news agency.

Following similar logic, Nick Nelson, UBS” head of European strategy, said last week that investors should concentrate on the food retail sector.

“You have to eat. You can make an argument that people will eat out less and eat more at home and their grocery bill might even go up,” he explained.

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