A “very strong finish” for European equities, says UBP
Rob Jones, co-head of European equities at UBP, and Rupert Welchman, portfolio manager at UBP, have recently discussed European equities at a presentation in London.
They highlighted “a triple stimulus of low euro, low oil price and quantitative easing policy of the ECB.”
Jones said 2015 is “a good year for European equities” in which flows are “supportive”, being traded near the bottom of their historic range.
“Timing is key. There has been a big run for the four first months of the year. Now it is time to be tactical. We must wait to see how it plays during the summer,” Jones added.
According to him, European valuations remain attractive and the corporate sector is performing well. He said that European companies would probably report stronger earnings in the last four months and expects “a very strong finish” for European equities at the end of the year.
Describing distinct phases in the stock market cycles, Jones argued that after a phase of hope that has last from 2013 to the third quarter of 2014, the European market is currently “somewhere in the growth phase” that would next lead to a phase of optimism.
Welchman said the markets have underestimated the structural reforms in Spain and Ireland that are performing better than expected. Welchman even foresees a 3% growth of the Spanish GDP for 2015.
As risks for European equities, Jones and Welchman listed the lack of reform in major European economies, deflation, European politics and geopolitical risks.
Jones said “Greece is a tragedy.” “The economic recovery of the country was beginning to happen before the election of Tsipras,” he pointed out, seeing Grexit as a real concern.
Jones commented he would be “quite surprised” if Brexit happens.