The US is the most promising developed equity market thanks to relatively healthy growth and strong corporate fundamentals, according to Société Générale Private Banking.

In the French bank’s first market outlook for 2012, it highlighted industrial, mining and energy securities in the US market as attractive investment options.

At the same time, Kim March, senior economist at SocGen’s private bank, said in a webcast presenting the outlook that a potential downturn in the US labour market would put the analysis under threat.

The firm’s second favourite equity market is the UK, despite the fact that the country’s GDP contracted in the fourth quarter of 2011. “We still think that the macro situation in the UK is quite challenged, it is more sectoral because the index is largely weighted in mining and energy,” March said. “Even though it has exposure to the eurozone, the index is highly exposed internationally with the majority of sales outside the UK. And we have QE (quantitative easing) in the UK, which continues to provide support to the market.”

SocGen remains gloomy about eurozone equities and sees a Greek default as the biggest threat to market stability. March also said in the webcast that the private bank expects more downgrades because of the low-growth environment.

Beyond the developed world, March said that “emerging markets have much more at their disposable in terms of policy tools to combat the growth slowdown. They can unwind much of the monetary tightening they engaged in 2010 and 2011 and have already started to do so.”

March also expressed a positive attitude to fixed income, especially global investment grade credit and high yield in the US and Asia. “We continue to prefer the highly rated BB-sector,” she said. “In both cases, default rates are low. In the US, default rates was 7.4 per cent at one point in 2011, we expect those to drop to 1.5 per cent in 2012.” She warned that default rates are on the rise in the eurozone.