An overweight stance towards European equities has become something of a consensus viewpoint for global asset allocators this year, particularly against the US market, where demanding valuations have combined with disappointing economic growth and President Trump’s inability (to date) to implement his agenda of tax reform, infrastructure spending and deregulation. By contrast, economic growth in the Eurozone has surprised to the upside, hopes for structural reform in France have risen, and political risk has, if anything, been positive.
Despite this positive fundamental backdrop, European equities have failed to outperform US equities. Daniel Morris examines why this is the case in the first of our Intelligence Report articles. Our second article also explores another European equity theme, and another popular investor position. Jeroen Knol takes a look at the outperformance of European banking stocks this year, seeking explanations for recent underperformance and drawing some cautiously optimistic conclusions for the future.Download to read more