GLOBAL - European and Japanese equity markets will outperform their US counterparts over the next 12 months, JPMorgan Fleming predicts.
The asset management firm said lower valuations and a less mature economic recovery would benefit European and Japanese markets with returns estimated at 10-15%.
Global strategist Gary Dugan said these were the “two most undervalued developed markets” while US equities looked “over-valued” in comparison.
He added: “However, despite positive forecasts for GDP growth, rising corporate profits and the likelihood that global manufacturing will start the year on one of its strongest notes in a decade, fiscal and geopolitical factors could still have a strong bearing on market direction.”
The US economy was considered “interest rate sensitive” with any rapid increase by the Federal Reserve likely to have an adverse effect on the market.
JPMF said a key fear for Japanese and European corporations was the further weakening of the dollar but it believed these concerns were unfounded as both markets had previously outperformed during periods of local currency strength.
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