Equity ownership remains low in Europe due to undeveloped public equity markets, generous pension plans, and the lack of tax incentives. European bulls cite the following to argue that ownership will rise: (1) the bull market of the late 1990s raised awareness of equities, (2) with falling interest rates, Europeans are looking to equities for…
Three factors are critical in improving the prospects for the United Kingdom and Europe: a recovery in the U.S. economy, continued strength in U.K. consumer spending, and structural improvements in continental Europe. Although bond and equity markets have priced in expectations for a global economic recovery between the middle to end of 2002 because evidence…
European investors are increasingly moving into bonds. Provided the economic downturn does not generate a higher than expected level of defaults, the high-yield market should provide opportunities for those able to tolerate a higher degree of risk. For the more staid, the embryonic euro inflation-linked bond market and U.K. corporate inflation-linked bond market provide opportunities…
Small-cap stocks in the United Kingdom and Europe are attractive because they provide added diversification within domestic, not global, markets. In addition, their valuations are more attractive than those of their large-cap brethren.
With world markets mired in a severe synchronised slowdown, the long-term outlook for U.K. and continental European equities remains uncertain. While capital markets may take short-term comfort in further interest rate cuts by the European Central Bank and the Bank of England, extra liquidity and lower borrowing costs may not be enough to encourage nervous…
The recent rally has led to speculation that the euro may be embarking on a prolonged bull market and the outlook for the euro/U.S. dollar exchange rate clearly hinges on the relative strength of the U.S. and euro-zone economies, and the outlook for relative capital demand in particular.
While most economic indicators are clearly heading south, U.K. consumers continue to hit the shops, showing no signs of retrenchment. Rising financial wealth and steady growth in real disposable income have helped sustain strong consumption growth over the last few years, but the fall in equity value, moderating real income growth, and the threat of…
Evaluation of the effect of FTSE restructuring their indexes, specifically the FTSE All-Share Index, to better reflect the underlying free float reveals that index changes will be minor in the United Kingdom. The dearth of restricted holdings in the U.K. market should minimize the turnover and trading costs associated with FTSE’s change over to free-float…
The euro-zone economy has undoubtedly caught some sort of bug, and investors are struggling to diagnose whether this is just a cold or a more serious case of the flu. On the one hand, business sentiment and industrial production have dropped sharply, but on the other hand consumer sentiment and spending have held up relatively…
A quick survey of representative global equity managers indicates that they have moved to an overweight position in U.K. equities, and are now underweight Europe ex U.K.