Oracle stays a buy, German stocks also look attractive (page 3 of 3)

We would like to reiterate Adidas-Salomon (ADS GY; EUR 79.75) as our play on a weakening USD. With a net USD exposure the company will benefit from a weakening US Dollar over the medium to long-term.

Further corporate news, which moved the respective sectors were the spin-off of Hypovereinsbank's (HVM GY; EUR 15.33) real estate business, the purchase of Vivendi Universal's (EX FP; EUR 17.2) US entertainment asset by GE's television unit NBC and the announced takeover of the British medical products manufacturer Amersham (AHM LN; GBP 7.60) by GE.

Carrefour's (CA FP; EUR 44.4) 3Q sales increased 5.8% (ex-currency) in line with expectations reflecting a smaller currency impact on the top line in the 2H. Sales were helped by further store opening and demand at its European discount chains.

According to a study by Strategy Analytics, European mobile phone shipment increased by 13% in the 1H of this year on the back of new models boosting shipments. Nokia increased its market share in Western Europe to 49% (44% 1H02) and Siemens (SIE GY; EUR 55.46) to 13% (11% 1H02). Nokia will report this Thursday with EPS for the 3Q expected at EUR 0.18.

Although we never really approach Europe from a country perspective, we would like to reiterate our stance towards Germany. The German economy is still in a mild recession.

Sentiment indicators, however, have markedly improved and growth is expected to accelerate moderately in the coming months supported by consumption. On valuations, forward earnings appear to have bottomed out and at 14.5x earnings, the Dax still offers 15% upside potential to the average since 1988 of 17x.

However much hinges on the US Dollar. If the recovery momentum is stronger than the impact from any US Dollar weakening and political reforms are approved within reasonable time, we believe Germany can continue to outperform.

Year to date the Dax-Index returned over 20% compared to the 9% of the DJ Euro Stoxx 50 Index. In addition, Germany is expected to benefit the most among the European countries by the EU enlargement given its strong trade links with the accession countries. (Source: DB)

Stock to play a German recovery would be Deutsche Telekom (DTE GY; EUR 12.79), Volkswagen (VOW GY; EUR 41.54), BASF (BAS GY; EUR 38.90), SAP (SAP GY; EUR 124.80), Siemens (SIE GY; EUR 55.46) and MAN AG (MAN GY; EUR 20.23) with the latter three among our favourites.