European Stocks Becoming Relatively Expensive

Investors have plowed into Europe, making it the consensus positive call, but some analysts are starting to think it’s time to curb the enthusiasm.

Despite markets’ volatile start to the year, investors have plowed $15.5 billion into developed Europe equity funds so far this year, according to data from Jefferies. The funds have seen 32 straight weeks of inflows, as investors bought around $81.8 billion worth of shares, the data show.

The enthusiasm has left equity valuations “too stiff,” said Willem Nabarro, head of European equities for Asia at Exane-BNP Paribas. Europe’s shares aren’t offering enough compensation for the macro risks, he told CNBC.

“Just look at the valuation of the Spanish banks,” he said. “They’re trading at the same levels as, for example, the Swiss banks and more expensive than the French banks or some of the Nordic banks, where the risks are much lower,” he noted.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu