The financial press has been dominated by Europe so far this year and seemingly for all the wrong reasons. The worrisome public debt situations in Greece and elsewhere, and the broader implications for Europe, have been concerning for investors and commentators alike.
We believe that investors should be thinking differently about Europe. Whilst we share some of the concerns over the strength of the peripheral European economies, with Greece, Portugal, Ireland and Spain all experiencing challenges in their domestic economies, the reporting of problems in Europe has largely ignored the strength of other European markets like Germany, France, the Netherlands, Switzerland and some of the Scandinavian nations.
In this paper we focus on five reasons why we believe that European equities are worthy of fresh consideration by investors in the current economic climate:
- The market may be too focused on the weaknesses of Europe’s smallest economies when investors should be focused on the strengths of its largest economies.
- Core European economies are displaying relatively moderate levels of debt, a more stable monetary environment, lower government bond yields and a lower cost of capital when compared with developed market peers.
- Increased demand from the emerging markets and a weakened euro will benefit European exporters
- Europe has a range of high quality, globally diversified companies that are trading on attractive relative valuations
- The recent dominance of top-down themes has created opportunities for fundamental investors
The financial press has been dominated by Europe so far this year and seemingly for all the wrong reasons. The worrisome public debt situations in Greece and elsewhere, and the broader implications for Europe, have been concerning for investors and commentators alike.
We believe that investors should be thinking differently about Europe. Whilst we share some of the concerns over the strength of the peripheral European economies, with Greece, Portugal, Ireland and Spain all experiencing challenges in their domestic economies, the reporting of problems in Europe has largely ignored the strength of other European markets like Germany, France, the Netherlands, Switzerland and some of the Scandinavian nations.
In this paper we focus on five reasons why we believe that European equities are worthy of fresh consideration by investors in the current economic climate:
- The market may be too focused on the weaknesses of Europe’s smallest economies when investors should be focused on the strengths of its largest economies.
- Core European economies are displaying relatively moderate levels of debt, a more stable monetary environment, lower government bond yields and a lower cost of capital when compared with developed market peers.
- Increased demand from the emerging markets and a weakened euro will benefit European exporters
- Europe has a range of high quality, globally diversified companies that are trading on attractive relative valuations
- The recent dominance of top-down themes has created opportunities for fundamental investors
The financial press has been dominated by Europe so far this year and seemingly for all the wrong reasons. The worrisome public debt situations in Greece and elsewhere, and the broader implications for Europe, have been concerning for investors and commentators alike.
We believe that investors should be thinking differently about Europe. Whilst we share some of the concerns over the strength of the peripheral European economies, with Greece, Portugal, Ireland and Spain all experiencing challenges in their domestic economies, the reporting of problems in Europe has largely ignored the strength of other European markets like Germany, France, the Netherlands, Switzerland and some of the Scandinavian nations.
In this paper we focus on five reasons why we believe that European equities are worthy of fresh consideration by investors in the current economic climate:
- The market may be too focused on the weaknesses of Europe’s smallest economies when investors should be focused on the strengths of its largest economies.
- Core European economies are displaying relatively moderate levels of debt, a more stable monetary environment, lower government bond yields and a lower cost of capital when compared with developed market peers.
- Increased demand from the emerging markets and a weakened euro will benefit European exporters
- Europe has a range of high quality, globally diversified companies that are trading on attractive relative valuations
- The recent dominance of top-down themes has created opportunities for fundamental investors