“Most of the major European economies are growing strongly,” says Lind, “driven by the easing of pent-up demand, improved consumer confidence and a boom in industrial activity.”
Furthermore, Lind considers that This is not a temporary rebound, but rather a significant change in consumer behavior and the political climate, which could lead to a strengthening of European economic growth, and also an increase in inflation, in the coming years.
Despite these forecasts, we are facing a very uncertain economic environment, and the new omicron variant could cause a slowdown in growth in the first months of the year.
European equities could also be attractive. European companies are trading at lower valuations than US companies. The price-earnings (PER) ratios of European companies are at 15.3 times (according to the 12-month forecast), compared to 18.4 times for the MSCI ACWI index and 21.5 times for US equities [i].
US companies have led the earnings recovery, thus reflecting the strong economic rebound, but now we are beginning to see earnings forecasts rising strongly in the EU and UK, driven by the finance sectors, energy and materials.
As corporate earnings figures rise, European markets, and especially the UK, could significantly outperform other regional markets.