Pease on Europe: Investors are being paid to be patient

ON EUROPE

There is no denying that European equities are attractively valued.

In mid-June, the MSCI Europe ex UK was trading on 9.6 times 12-month forward earnings, well below the 20-year average of 15 times. However, valuations can remain cheap for a long time. Confidence is the key ingredient that can coax investors into buying shares and encourage executives to engage in the corporate activity that can drive equity prices higher. Sadly, confidence is in short supply. Even in Germany surveys reveal that business confidence is waning, showing that Europe’s economic powerhouse is being affected by the problems in southern Europe.  In recent weeks the crisis in ...