He mentioned E.On , RWE , and GDF but said that "you shouldn’t rush in" and urged particular caution on southern European utilities firms which he said were failing to address their debt issues.
“Southern Europe in a way you can say that the utilities is a picture of a mini scale of the whole sovereign problem. And it's going to continue. That’s where I would say we would really stay out of the stocks because there will be a lot of deleveraging,” he stressed.
Russia and Brazil
Lekander said UBS maintains a bullish stance on Russian and Brazilian utilities and singled out stocks that were largely foreign owned in Brazil.
“In Brazil, and I will say this is a great attractive market, the problem is governance. So therefore, invest in those that have a significant foreign ownership,” he said.
“You have Tractebel which is majority owned by International Power, you have EDP which is owned by the majority owned by EDP in Portugal, so that’s what I would do in Brazil,” he said.
On Russia, Lekander said he favored the generating segment of the utilities sector and singled out hydro generating company RusHydro and E.On Russia, formerly OGK-4 as key stock picks.
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