A Snapshot Of European Equities
Supporting Image for Blog Post

View from the Observation Deck  

  1. Today's blog post shows that European equities are trading at reasonable valuation levels looking out to 2018 and 2019, especially relative to their respective 10-year average P/Es, in our opinion. 
  2. The outlook for the growth in corporate earnings looks encouraging as well. Most of the major indices featured in the chart are expected to post 7.00-9.00% EPS growth rates in 2018 and 2019. 
  3. From 3/9/17 (8th anniversary of bull market) through 9/27/17, data from the Investment Company Institute indicates that investors funneled an estimated $140 billion into foreign stock funds and exchange-traded funds (ETFs), with European equity funds being a major beneficiary of said flows, according to Money. Over the same time period, investors liquidated $50 billion from U.S. stock funds and ETFs. 
  4. While the U.S. economy emerged from its last recession in Q3'09, Europe's economy did not exit its recession until Q2'13, nearly four years later, according to Money.
  5. Staggered global economic cycles offer investors another potential strategic diversification opportunity, in our opinion.  
This chart is for illustrative purposes only and not indicative of any actual investment. There can be no assurance that any of the projections cited will occur. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. The MSCI Europe Index is a free-float weighted index designed to measure the equity market performance of the developed markets in Europe. The FTSE 100 Index is a capitalization-weighted index of the most highly capitalized companies traded on the London Stock Exchange. The CAC 40 Index reflects the performance of the 40 largest equities listed in France, measured by free-float market capitalization and liquidity. The DAX Index is a total return index of 30 selected German blue chip stocks traded on the Frankfurt Stock Exchange. The SMI Index (Swiss Market) is a capitalization-weighted index of the 20 largest (represents around 85% of Swiss equity market) and most liquid stocks of the SPI (Swiss Performance Index) universe. The IBEX 35 Index is the official index of the Spanish Continuous Market and is comprised of the 35 most liquid stocks. The OMX Stockholm 30 Index is a market-weighted price index consisting of the 30 most actively traded stocks on the Stockholm Stock Exchange. The AEX Index is a free-float adjusted market capitalization-weighted index of the leading Dutch stocks traded on the Amsterdam Exchange. The BEL 20 Index is a modified capitalization-weighted index of the 20 most capitalized and liquid Belgian stocks traded on the Brussels Stock Exchange. The OMX Helsinki Index includes all the shares listed on the Helsinki Stock Exchange.

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Posted on Tuesday, October 10, 2017 @ 1:55 PM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.