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European Renaissance

European Equities in a Nutshell

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Europe is making a comeback

Economic activity is gaining momentum, leading to lower unemployment levels and a more positive outlook. European stocks should benefit from this uptick in the market trends and we expect to see increased sales and earnings growth. At Amundi, we can offer our clients four robust and recognised investment solutions which seek to take advantage of a rising European market. 

 

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The Case for a Selective Approach

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INVESTMENT INSIGHTS | BLUE PAPER | October 2017

Why a European renaissance?
In our view, the concept of a “European renaissance” reflects the current phase in which multiple positive dynamics are unfolding in Europe. Such dynamics, virtuously interplaying, are creating a case that supports a sustainable growth path in Europe and a favourable environment for European risk assets.

 

Resurgence in Europe

The European recovery is gaining momentum

Transfer of growth through companies' sales and earnings

 

  • Activities and economic figures are improving, leading to the rise in output gap growth and the decrease in unemployement rates.
  • With inflation below target, the ECB should remain accommodating with supportive monetary policy.
  • European companies should benefit from an improvement in domestic consumption.

 

Political concerns are fading among the investors

Confidence has returned & investors are coming back to market

 

  • If the U.K. remains the main concern following Prime Minister Theresa May's poor election result and impending BREXIT uncertainty, populist fears are abating, as demonstrated by the recent Election results in the Netherlands and especially in France, strengthening the Franco-German axis.

 

 

European equity markets' valuation relatively attractive

...particularly in relation to the U.S.

 

  • Due to its late cycle, European Equity markets lagged significantly compared with the U.S.
  • On a relative basis, among developed markets, Europe appears to be an attractive market. Within Europe, differences persist in terms of valuation at the single country level.

 

European Renaissance - Didier Borowski
Didier Borowski
October 25, 2017 | 03:18 min

Today's market environment appears supportive of European Equities, as the economic landscape improves, political risks decrease and, with meaningful earnings growth coming through, valuations are justified.

How to take advantage of Europe's Renaissance

At Amundi, we can offer our clients four robust and recognized investment solutions which seek to take advantage of an upsurge in European economic activity.

Conservative

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WHY?: European Equities are well positioned to take advantage of improving economic conditions

A European equity exposure with low volatility to limit the downward trends

  • Search for volatility minimisation
  • A broad and diversified portfolio
  • Historically, a more robust investment during the bearish cycle
 

Conviction

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WHY?: Companies' earnings are benefitting from the economic recovery

A concentrated approach seeking quality in value investing

  • High conviction portoflio with an equal weight approach
  • Disciplined 'margin of safety' approach to investing
  • Bottom-up and disciplined security analysis to avoid unintended risk-taking
 

Income

european-eq-target-income-blue

WHY?: Seeking to address investors' income objectives by taking advantage of Europe's improving economy

Improving levels of income in a low yield environment

  • High dividend stock selection
  • Additional income stream through covered option-writing
  • Potential to deliver both income and capital growth
 

Eurozone

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WHY?: Focusing on the Eurozone, where opportunities seem stronger

Primary focu on the Eurozone, generating alpha from core and opportunistic holdings

  • Core portfolio focused on highest quality names
  • Opportunistic holding allowing flexibility to take advantage of shorter term opportunities
  • Maximises the impact of each idea by holding only significant overweight positions versus the benchmark

We look forward to hearing from you!