Europe
2.5 Stars - Neutral
Macro Outlook
- Economic growth momentum likely to slow in 1Q 22 given rising Omicron cases and fresh restrictions. However, growth outlook should remain resilient as surveys and hard data are showing signs of improvement.
- At the moment, policies remain supportive despite a planned (gradual) tightening by ECB later this year.
What we like about
- Second leg of cyclical EPS recovery driven by consumer, travel and auto sectors.
- Global cyclical and value rotation underway which greatly supports European equities.
- Valuations decent on a historical basis and cheap on a relative basis, especially against US equities.
Investment Risk(s)
- Omicron growth risk and equity repricing risk from the extension of current restrictions..
- Political uncertainties from upcoming elections across multiple nations in the region.
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