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Investors fearing the end of road for Europe shouldn’t give up yet

28th November 2012 Print

As the Eurozone submerges into recession for the second time in four years, a new study by The Share Centre, reveals the impact economic factors have on investment habits and highlights opportunities in to the region.

According to the study over half (54%) of investors say economic factors affect their investment decisions and 29% see political issues as a major influencer. Men are influenced by the economy, with 58% stating it impacts their investment decisions compared to 48% of women.

A further six in ten (60%) investors are negative towards the European economy. However, despite sovereign turmoil in the Eurozone, and recent protests against austerity measures causing further disruption, many countries in Northern Europe are home to some of the world's most successful businesses with a wealth of investment opportunities. These opportunities are often marred by economic and political instability.

There is no doubt that the region is faced with many headwinds. However, the announcement that the European Central Bank would do whatever it takes to support the Euro and the German Constitutional Courts' decision to reject legal challenges to the creation of a permanent European Stability Mechanism are both very positive.

Encouragingly, a quarter (24%) of income seekers continue to look to Europe and will undoubtedly benefit in the long term through investing in the region. 

European equity markets remain cheap when compared to other major developed markets and with some positive earnings revisions, the investment opportunity increases.

Andy Parsons, head of investment research at The Share Centre, said:  "Whilst the continued troubles in the Eurozone make the region unpredictable, there are opportunities to be had. Investors should take a step back from focusing solely on economic factors and instead consider businesses based in the region. Europe offers investors an abundance of strong internationally renowned businesses with exposure to the topical longer term structural growth trends.

"Despite its geographical placement, Europe still offers strong dividend paying companies and long term opportunities. The MSCI Europe Index currently yields around 3.88%, which is more than many other developed markets and more than the two year, five year and ten year yields on the debt a number of Sovereign nations.

"Whilst the investment story for Europe is increasing, investors do need to be mindful that the route ahead will not be smooth and the region is still subject to bouts of significant volatility.

Three European funds that are worth a look:

1 BlackRock European Dynamic fund
2 Standard Life European Equity Income fund
3 Jupiter European fund

For more information, visit share.co.uk.