Germany, UK, Netherlands, Scandinavian countries and Switzerland are likely to continue to outperform other European equities next year, thanks to a better macro backdrop and higher exposure to international markets, reckons Citi.
Those countries, nicknamed GUNS, claim eight of the nine least risky spots in Citi's Country Attribute Model, which includes exposure to different global regions, earnings momentum, valuations and macro factors.
Belgium, Ireland, Spain, Portugal and Greece, on the other hand, get the highest overall risk rankings.
"Long north and short south has been one of our key themes over the last couple of years. The macro support for this is still in place and valuations also point this way too," Citi says in its 2013 outlook note.
"However, there is tentative evidence that earnings trends are stabilising in the south. The balance of these factors keeps our preference for north over south but with a little less conviction than previously."
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