Monthly Market Report - July 2017
21st June 2017
With commentary from David Stevenson
If I’d have asked most readers which region they’d suggest would constitute a ‘safe haven’ by mid 2017, my guess is that most wouldn’t have plumped for the Eurozone. For months now we’ve been worrying ourselves senseless about the collapsing Euro, the revolting Greeks, the restless French/Dutch and their love of populists and the growing sense of boredom with the steady Chancellor Merkel.
Now though everything has changed. Macron has won the election; the Dutch have rejected the populists and Merkel looks like she’s cruising to a victory in Germany. Crucially European stock markets have powered ahead. In fact, the European market overall is close to the multi-year peaks it last reached in 2000, 2007 and 2015 – and in all three instances corrected shortly afterwards. But there’s good reason to think that it is ‘different this time’ (!).
A recent note by analysts at French bank SocGen observes that European equity mutual funds and ETFs have posted $15bn in inflows year to date – see the chart below. However, the bank’s analysts observe that this does not come anywhere close to the $100bn of outflows recorded in 2016. "Thus, many global international investors are still underweight European equities”.
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