European stocks are currently best positioned to outperform the global equity market. That is the view of professional investors, ranging from pension, investment and hedge funds, according to data from Best Block and a Citigroup survey.
For years, US securities have been known to outperform broad indices, however, there may well be a changing of the guard.
It is only a new phenomenon. As recently as this spring, professional investors were of the view that US stocks offered the maximum possible returns.
However, Europe offers more investment opportunities in value stocks and cyclical investments, as well as assets that stand to benefit the most from a global economic recovery. In addition, European equities are also less vulnerable to concerns about inflation.
A survey among professional investors revealed that European shares were the most appealing investment, over raw materials and US equities.
Professional investors are not the only source suggesting an optimistic outlook for European shares. Google search engine data revealed a disproportionate weighting towards “European stocks” over “US stocks” too. The former received a Google Trend Score of 59, while “US stocks” scored just six, with 100 representing the highest possible search volume.
Having said that, US shares performed better last year. The NASDAQ gained 40.9% in a 365-day review, while the Dow Jones rose by 32.2%. By way of comparison, the EURONEXT 100 gained 29.1 %. That said, the tide could soon turn, according to the stock market experts.
The Euronext 100 Index, below, is the blue chip index of the pan-European exchange, Euronext NV. It comprises the largest and most liquid stocks traded on Euronext.
EU indices are leading the race when it comes to ESG credentials – although the leading indices from Germany, France and Italy still have much room for improvement, they are clearly ahead of major indices from the other G7 countries in terms of their temperature paths.