‘Undervalued’ European Equities Look Better Bet Than US

Pictet Asset Management predicts that European stock markets will outperform US equities over the next five years

Karen Kwok 20 June, 2017 | 3:27PM
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Concerns about an overheated US stock market have led Pictet Asset Management to favour European equities instead. The fund management group says that it expects Europe equities to outperform US stocks over the next five years.

Luca Paolini, chief strategist at Pictet Asset Management, says the group is diversifying away from US stocks because of high valuations. After an eight-year US stock market rally, Paolini pointed out that the US market is the most expensive equity market in the world right now.  As if to illustrate this point, the S&P 500 closed at an all-time high of 2453.46 yesterday – boosted by a rebound in shares of technology companies.

Paolini said: “The US market looks the most vulnerable across the global market. The valuation of US stocks is high while US economic growth is low; and investors are very relaxed about it. This is never a good sign.” This is why Pictet expects this market to be ‘challenging’ in the years ahead.

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Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk