/ SECTOR PROFILE /
President
Mario Draghi
unwrapped his
“big bazooka”
and aimed
it squarely
at financial
markets, which
loved it
“Europe, being an open economy
where exports are important, is also
suffering from a slowdown in global
trade, not to mention the impact
of a potential Brexit. It all adds up
to serious concerns about a lack of
earnings growth and the challenge
for fund managers is to find stocks
offering both earnings progression
and an attractive valuation.”
A POLITICAL PRECEDENT
other markets and with the ECB
seemingly backstopping the bond
market, causing yield compression,
the income on offer versus debt
markets was enticing,” Morgan said.
“Roll on 12 months and this logic
remains valid, but European equities
still lag.”
IMPACT OF BREXIT
Morgan adds the poor run stems
from macro-economic concerns,
with industrial production across
Europe in decline and no sign of
turning around any time soon. In
addition, youth unemployment is
widespread and QE appears to be
losing its clout.
With the UK set to vote on EU
membership, polls are veering back
and forth and the only indication is
the result will be tight either way,
increasing market uncertainty.
Morgan says while much has
been written about Brexit’s potential
impact on UK companies, it will be
felt strongly on the continent too.
“If sterling devalues as a result of a
‘leave’ vote, as is widely anticipated,
European companies exporting
to the UK will be less competitive
and a slowdown in trade will take
its toll. Perhaps more significantly,
though, it sets a political precedent,
and will reinforce anti-EU
movements in other nations.”
With Spanish, French and
German elections looming in the
next two years, that is a worry for
the EU’s most influential leaders.
“It isn’t hard to imagine Brexit
upsetting the applecart,” he said.
PERFORMANCE OF SECTOR AND INDEX OVER 1YR
2%
MSCI AC Europe (-5.50%)
IA Europe ex UK (-2.90%)
0%
-2%
-4%
Thinking about
oil & gold ?
ETF Securities provides Europe’s most comprehensive range of commodity
ETPs, backed by our track record of successful innovation and bolstered by our
commitment to making regular and independent market insights driven-research
available to all investors. We are a global pioneer in ETPs having developed
the world’s first gold ETP in 2003 and the world’s first oil ETP in 2005.
-6%
Speak to the original oil and gold ETP provider
-8%
-10%
-12%
-14%
etfsecurities.com/commodities
-16%
Source: FE Analytics
22
This financial promotion has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited which is authorised and regulat-
ed by the United Kingdom Financial Conduct Authority.
trustnetdirect.com
Investments may go up or down in value and you may lose some or all of the amount invested. Past performance is not necessarily a guide to future performance. You should consult an independent
investment adviser prior to making any investment in order to determine its suitability to your circumstances.