LONDON (Reuters) - Credit Suisse's equity strategists upgraded non-London focussed UK housebuilding stocks while cutting back on European utilities as part of changes to recommendations following the Brexit vote.
Stocks exposed to the domestic British economy, such as housebuilders and property companies, slumped after Britain's shock vote on June 23 to quit the European Union.
"We upgrade non-London housebuilders to 'benchmark', as outside of London, the house price-to-wage ratio is not extended, the rental yield is around 2 percent above the mortgage rate, it is a highly undisrupted sector where supply is two-thirds of required demand and government policy will likely remain supportive," they wrote in a strategy note.
They also upgraded UK life insurers (FTNMX8570) to "overweight" but cut European utilities (SX6P) to "underweight".
The broker's only remaining domestic UK "underweight" is on REITs, particularly offices, which it sees as the most Sterling-sensitive sector. Share prices are also not discounting a sharp enough fall in commercial property values, Credit Suisse (SIX:CSGN) says.