Chief analyst: Potential in European stocks
European stocks are relatively inexpensive, and despite the prospects for low growth within the region, the conclusion is that the outlook is good.
In the longer run there is potential for experiencing even warmer winds on the European investment markets. The extensive structural reforms, which are either implemented or under way in more European countries, will in the longer term provide opportunities for European companies and thus underpin European stock markets. This is so even though the European stock markets have already provided positive returns this year – at least up until now.
According to chief analyst for Danske Invest Frederik Engholm-Hansen, the reforms in Europe will result in increased flexibility and strengthened competitiveness of the European companies, and in the longer run this will have a positive effect on employment, investment appetite and on domestic private spending. This will altogether boost companies’ bottom lines.
Potential in European stocks
”Seen from an investment point of view, this should be seen in light of the fact that many players are still taken a highly pessimistic stance towards Europe – something which is being reflected in a low valuation of European companies relative to their American counterparts. The risk and the uncertainty as to the restoration process are justifying a fair proportion of this rebate, but in our view not the entire rebate. When growth takes hold with a vengeance, there are plenty of inexpensive, more flexible manpower and plenty of industrial capacity to exploit,” says Frederik Engholm-Hansen.
He explains that Europe is in a situation which in some regards is similar to the one in which the developing countries were in at the beginning of this millennium. Following several crises in Asia, Russia and Latin America there was plenty of room for growth, and this in combination with the fruit of political reforms in the 1990s and low expectations among investors paved the way for high returns until the onset of the financial crisis.
According to chief analyst for Danske Invest Frederik Engholm-Hansen, the reforms in Europe will result in increased flexibility and strengthened competitiveness of the European companies, and in the longer run this will have a positive effect on employment, investment appetite and on domestic private spending. This will altogether boost companies’ bottom lines.
Potential in European stocks
”Seen from an investment point of view, this should be seen in light of the fact that many players are still taken a highly pessimistic stance towards Europe – something which is being reflected in a low valuation of European companies relative to their American counterparts. The risk and the uncertainty as to the restoration process are justifying a fair proportion of this rebate, but in our view not the entire rebate. When growth takes hold with a vengeance, there are plenty of inexpensive, more flexible manpower and plenty of industrial capacity to exploit,” says Frederik Engholm-Hansen.
He explains that Europe is in a situation which in some regards is similar to the one in which the developing countries were in at the beginning of this millennium. Following several crises in Asia, Russia and Latin America there was plenty of room for growth, and this in combination with the fruit of political reforms in the 1990s and low expectations among investors paved the way for high returns until the onset of the financial crisis.
