Skip to content

Investors’ Attention Diverging towards Europe than the U.S.

European Market

On the whole, Europe has wisely managed the recent crisis and sentiment on the economic level. Several investors have started betting on Europe lately than that of the U.S. The equity valuations look sprawled, and China tensions are pretty intense in the U.S. market. Also, with the coming November election, U.S. equities will be at an all-time high. Whereas, while looking into upcoming events, Europe is a calm economy compared to the U.S.

Investors say the European market is cheap, and data shows that European stocks are poised for a quicker profit rebound. But the stocks in Asia and the U.S. have revived near records, and the Europe Stoxx 600 Index is still about 15% away from pre-pandemic highs. Although the investors are optimistic about this, the rise in virus cases and travel restriction threatens an already tenuous economic recovery (1).

Investors have Several Point of views on European Stocks

Bank of America Corp. found out that Europe is now the most favored region, and investors hold immense euro-area equity since 2018.

After seeing a big rally in the U.S. large caps, Kiran Ganesh, a managing director at UBS Global Wealth Management says, they are looking for a way to diversify. There are pockets of Europe that are good, which they might consider.

Peter Chatwell, head of the multi-asset strategy at Mizuho International Plc, also spoke about how Europe has a relatively calm economy than that of the U.S., the U.K., and China comparing the upcoming event risks in these countries.

Even BlackRock Inc. uplifted its view on European equities to overweight in June and cut earmarking to the U.S. The region’s coordinated and fast response to the pandemic is also a good reason to be confident said the Investors from BlackRock Inc. to Manulife Investment management.

Rabobank expects the euro to soften to $1.16 this year, down from $1.18, according to Jane Foley, head of F.X. strategy but also says it can be tough for the currency to rift $1.20 given the risk of further lockdowns in Europe slow-moving economic data.