Cut in chip manufacturers capital spending (page 3 of 3)

While we believe that this might cause some short-term profit taking we remain convinced that the current stock price does not fully reflect the long-term potential of this best-positioned company. After the recent downward revision earnings estimates are well below trend, which offers scope for potential surprises. Recent data shows that US staffing volumes are starting to pick up from their lows and Adecco has confirmed its key markets, USA and France, have bottomed out and are now in positive territory. We believe that Adecco has gained market share in the recent downtrend. This and its lean structure make the company well positioned to benefit from an eventual recovery. We would use the upcoming consolidation period to buy the stock.

A growing perception that the flood catastrophe in Germany would not seriously affect most insurance companies led to a nice rally in the sector (+7.58%). However, estimates about the total damages are climbing higher by the day. At this initial stage, it seems that just 10%-15% of the total loss (estimates range between EUR 15-25bln) may be insured. Allianz (ALV GY; EUR 142.16) remains the most exposed among the bigger insurance companies. Estimates for Allianz about potential damage claims have now reached a level of EUR 250 million. Rather than these claims we remain concerned about the high sensitivity of Allianz' share price to the equity market. A continuing fall in equity markets could lead Allianz to reduce its equity market exposure to protect its balance sheet. Insurance stocks remain the sector most heavily geared to the equity market. Given our cautious stance of equity market we remain cautious on insurance stocks. CSFB has reduced earnings estimates for Allianz for 2002 and 2003 by 20% and 40% respectively to EUR 3.07 and EUR 6.63 but reiterated its estimate for 2004 of EUR 16, which makes the stock attractive over the longer period.