Despite a strengthening economy, falling unemployment, renewed consumer confidence and increased corporate profits, Europe has fallen out of favour with investors in 2018.
Clearly, the macro data for Europe has deteriorated over recent months, mirroring a more general global slowdown as fears over potential trade wars and policy uncertainty have grown. But it is important to understand the context — namely, that the slowdown in lead indicators for Europe has been from near-record high levels. It is unrealistic to expect them to grind ever higher.
In the attached outlook, we examine the reasons for investors’ disdain for European equities and attempt to ascertain whether Europe is set to remain the perennial ugly duckling or whether there are reasons for optimism for investing in Europe as we look forward to 2019.