Sweden’s CB Fonder sees strong arguments for European equity

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CB Fonder, based in Stockholm, says that investors are increasingly set to reap the rewards from a so called “Marshall Plan 2.0”, which is spurring recovery across the region at a time when valuations still trail those for US assets.

In its latest Europe outlook – Marshall Plan 2.0 – Welcome Back Europe – the manager notes that the broader European market has got off to a good start so far in 2015, which in itself is a sign that the rest of the year should also be benign. Historically this trend has held up.

Similarly, it argues that “the underperformance of Europe compared to the US has come to an and”

“A weak euro, in USD terms, is beneficial to Europe, but also the valuation and the technical picture speaks for Europe.”

Other factors benefiting Europe include the fall in the oil price, which is described as the equivalent of a tax cut that should spur consumption, in turn leading to higher GDP growth, company profits and stock market values.

For exporting companies, the weaker euro means that they become more competitive in markets outside the euro area. CB Fonder says that “Germany is the largest beneficiary” of the ongoing currency policy.

Meanwhile, other assets such as bonds look expensive relative to equities.

Click here to read the full outlook: CB_Fonder_Europe_Outlook



Jonathan Boyd
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