What is the right strategy for Europe?

ON EUROPE

From the beginning of this year the eurozone equity market has provided high single digit returns (up to 7.5%).

This tells you one thing: eurozone corporates are not eurozone sovereigns. Their debt ratios are historically low therefore, what is needed for them to resume investment, is stabilisation of the political and macro environment. Mr Draghi’s announcement regarding the outright monetary transactions (OMT) programme, is a very important step in the right direction. By reducing the tail-risks, the historically high implied risk premium in the market should normalise over time and provide scope for a revaluation of European equities. They trade at attractive valuations with around a 20% ...