“We do see tentative signs that U.S. investors are starting to get interested again, but we suspect they, like us, are waiting for more clarity on the political front,” the chief investment strategist for EMEA & APAC said. “Also, the recent growth slowdown, which we think is close to troughing, is keeping foreign investors cautious.”
U.K. Prime Minister Theresa May is facing a potentially catastrophic defeat Tuesday for her Brexit strategy as members of Parliament bemoan her revised deal.
Over at JPMorgan Asset Management, Tilmann Galler remains steadfast in his preference for U.S. equities. One reason: European profit growth is at the mercy of gyrations in the economic cycle, the global market strategist says. “Investors will likely stay on the sidelines in Europe until we get the promise of a lasting recovery in growth.”
Buying Europe is the divisive call du jour. SocGen, which is underweight eurozone stocks, said this week that tentative tailwinds -- growth momentum, the end of trade tensions, and a Brexit deal -- would spur only limited gains given the strong first-quarter rally.
And Capital Economics is uber bearish, projecting the MSCI EMU Index will drop by more than 10 percent this year, as stalling global growth hits earnings. On the plus side, the research house reckons eurozone shares will hold up better than American counterparts.
“U.S. investors can’t ignore the fact that growth is decelerating in the eurozone and the ECB is concerned about ’continued weakness’ and ’pervasive uncertainty’ in the economy,” said Invesco Ltd.’s chief global market strategist Kristina Hooper.
Contrarians may not shed their label anytime soon.
This article provided by Bloomberg News.