Equities looking attractive amid collapse of the euro

EUROPE

The predominant theme in financial markets is the sovereign credit crisis in peripheral Europe, accompanied by the collapse of the euro against other major currencies.

This is putting significant pressure not only on European equities, but on other asset classes as well. Politicians are under pressure to restore confidence but are faced with the dilemma of implementing austerity measures and reducing debt levels without threatening the economic recovery. Investors’ risk-appetite is collapsing. Global investors seem close to capitulating on European equities, as illustrated by their record low allocation to the old continent. Admittedly, headline newsflow is dull and short-term solutions to structural problems are not yet on the horizon. In spite of ...