MARKET TALK: Budget Could Stall Mid/Small Cap Outperformance

16th Jun 2010 10:56

0956 GMT [Dow Jones] Next week's UK budget could mark the end of the outperformance of mid and small-cap stocks, due to their generally higher exposure to government contracts, says Deutsche Bank. Suggests the IT services sector, newspapers, defense stocks and housebuilders could continue to struggle under more stringent measures being taken. Thinks outsourcers Serco (SRP.LN) and G4S (GFS.LN) are likely to benefit the most from the report, which is expected to focus on fiscal tightening with a split 80:20 between spending cuts and tax increases. Deutsche rates Serco and G4S at buy. Meanwhile, says hold-rated Hays (HAS.LN) looks less attractive because of the possibility of public sector layoffs. ([email protected]) Contact us in London. +44-20-7842-9464 [email protected] (END) Dow Jones Newswires June 16, 2010 05:56 ET (09:56 GMT)