EUROPE - Investors have been too harsh on European markets, especially Germany, Barclays Global Investors claims.
The fund manager says that while Europe’s retailers have had a miserable few years, the manufacturing sector has held up much better due to the “resilience of export orders”.
BGI chief economist Haydn Davies said: “The weak economic environment has not hurt sentiment towards the euro, which also looks well supported by relatively high eurozone interest rates.”
In contrast to his optimistic outlook for Europe, Davies warned investors off Japan. He said the outlook for its export-led recovery was looking less promising by the month.
“The problem facing Japanese policy-makers is that there is little to drive activity if export growth does wither.”
Davies explained that Japan’s deteriorating economic environment was taking its toll on profit forecasts.
He added: “Japanese equities offer modest value compared to markets elsewhere and the Tokyo market is looking less attractive.”
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