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Share markets 2015: bet Europe, not US?

Wednesday, December 31, 2014 - 02:32

Worries over deflation and a sliding single currency don't stop some investors from tipping European shares as star performers in 2015. David Pollard reports.

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2014 - and a new Cold War in all but name emerges on the fringe of Europe. That, plus weakening emerging markets and faltering global growth could be enough to keep any stock index pinned to the ground. In fact, apart from a serious wobble at the end of the year, none of it held US and European equities back from high after record high. Their paths could, though, diverge. Justin Urquhart Stewart is with Seven Investment Management. SOUNDBITE (English) JUSTIN URQUHART STEWART, SEVEN INVESTMENT MANAGEMENT, SAYING: ''What you've seen is these records that you've seen in the States. Now rates are likely to rise there at some stage, that's not such good news for corporates overall, but the corporates are in pretty good shape. When you come back to Europe, you've got a different position altogether. We haven't had any QE to speak of yet, although those mechanisms look as if they're going to come through in some form or another, we've had more banking support and corporate outlooks are beginning to improve a little bit.'' Others go further. Saying that with a much-anticipated rate hike in the US hurting Wall Street, European shares are the ones to watch. Jeremy Batstone-Carr, Director Private Client Services, Charles Stanley. SOUNDBITE (English) JEREMY BATSTONE-CARR, DIRECTOR PRIVATE CLIENT SERVICES, CHARLES STANLEY, SAYING: ''The really bizarre thing is that despite the ongoing weakness in the euro zone economies, many European equities or equity markets are comprised of companies which do a substantial proportion of their business outside the euro zone. Therefore, my suspicion is that if there is going to be a surprise in 2015, it is that European equities outperform their US counterparts.'' That's the bullish view. As for the bears, there's plenty to chew on. Not least of all, the euro on the slide. Parity with the dollar is seen on the horizon by some - that will push investors towards US assets. And with reason, says Mike Ingram of BGC Partners. SOUNDBITE (English) MIKE INGRAM, STRATEGIST, BGC PARTNERS, SAYING: ''The economic fundamentals remain extremely fragile and the market is almost entirely dependent on the ECB delivering QE early next year and there I have some doubts that they will be able to deliver, and even if they are able to deliver, that it's going to be terribly effective in reflating European economies.'' Lower oil prices could help. They'll put spending money back into the pockets of European consumers - and corporates. Boosting sentiment and share prices. That is, if they don't feed into a much-feared downward spiral of euro zone deflation first.

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Share markets 2015: bet Europe, not US?

Wednesday, December 31, 2014 - 02:32