Why European Stocks are More Attractive than US Stocks

Europe may face several challenges - high levels of debt and unemployment - but investors should not disregard European equities on this basis

Dan Kemp 26 September, 2016 | 10:50AM
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European equities are a complex market. We have a broadly declining working population, slow productivity, structurally high unemployment, high debt levels and more recently the risk of EU dissolution. This is not exactly a recipe for success.

However, an investor that disregards European equities on this basis alone is a first-level thinker. The real question is how much of the bad news is already priced in, which admittedly, requires assumptions to be made on the future status of the European Union.

Our analysis shows that under most plausible scenarios, Europe is more attractive than the United States on a 10-year view. There appears to be two standout opportunities from a valuation perspective; namely European energy and European emerging market exposure.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Dan Kemp

Dan Kemp  is Chief Investment Officer, Morningstar Investment Management EMEA