“The only reason to invest in the US at the moment is the US dollar. I’m very negative about American stocks,” says Tim Peeters, a fund selector for Portolani in Belgium. “On the contrary, I am positive about European stocks which stand to profit from a weaker Euro.”
Allan Møller, head of fund selection for Danske Capital, also sees much better prospects in European stocks than in US equities. “Against a backdrop of increasing global growth, it is time for investors to take on risk again,” he says. “European equities, on the back of the lower oil price and the ECB’s bond buying programme which is likely to be launched soon, will benefit most from this.”
European equities, dollar-hedged
Consequently, Peeters (pictured) is heavily overweight both the dollar and European equities. “As we are euro investors, we have a reverse hedge to the dollar,” Peeters explains. His fellow European fund selectors more or less agree with Peeters, at least on the conclusion he draws.
During our most recent events in Oslo, Zurich, Helsinki and Barcelona which were held between 28th October and 19th November, fund selector sentiment towards European equities is consistently more positive than US equity sentiment.
The same pattern can be observed when it comes to emerging market equities: the amount of people saying they will step up allocation in the next twelve months is significantly higher in all countries than the share of fund buyers saying they will increase exposure to American stocks.
Møller is not so sure about EM equity prospects though. “It’s a bit tricky, as it is all about China again. The figures coming from there are a bit blurred, so as a whole I’m not bullish, rather neutral.”