Barclays Bank building Chris Ratcliffe | Bloomberg | Getty ImagesBarclays has backed European equities to hit new highs in 2021, with 13% potential upside for the Stoxx 600 and two stocks offering more than 50% potential returns.
In their 2021 outlook, equity analysts at the bank said a stock market rally would mostly be driven by earnings-per-share growth, with high-efficacy vaccines bringing the Covid-19 pandemic under control and a return to normality bringing about a strong upswing for cyclical stocks.
Barclays' biggest overweight stock for 2021 is oil major BP, for which it sees 63.7% upside potential, followed by Dutch bank ABN Amro with 50.6% and British telecoms company BT Group with 47.2%.
The year's biggest losers are expected to be Lufthansa, for which Barclays sees a -46.1% potential downside, Dutch payment company Adyen (-34.1%) and British online supermarket Ocado (-30.5%).
However, Barclays does see room for continued rotation away from "relative safe havens" such as bonds, cash, developed markets, U.S. growth and defensive stocks into lesser-owned riskier assets, such as emerging market and European equities, cyclical and value stocks.
Chris Ratcliffe, Emmanuel Cau, Cau
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