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The Case for Europe
For the past decade, a long-lasting deflationary economic cycle drove bond yields lower creating the perfect environment for high-growth stocks to flourish.
1 Jun 2023
1 minute read
1 minute read
Key takeaways:
- Europe is home to many financial, energy, material and industrial companies, which tend to do better than their defensive counterparts when emerging from a downturn.
- To achieve net zero carbon, energy companies – which have in place the infrastructure, technology and cash flow – will be essential. Many of the market leaders in energy reside in Europe meaning that it is well placed to benefit from this long-term secular growth theme.
- Valuations are cheap, even by European standards, and yet a diverse set of robust companies exist in the continent. This could offer an attractive entry point for investors.
This backdrop saw growth stocks outperform value stocks, with the US leading the growth charge while value-oriented Europe lagged behind. We believe that today’s environment of higher inflation and higher rates provides ground for value stocks to outperform growth, marking a turning point for European equities. So, how will this cycle be different for Europe?
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JHI
JHI
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