Barclays has rebalanced its equity focus away from the U.S. and toward Europe and emerging markets for 2020.
In its 2020 outlook, published Wednesday, the British lender said it expects European equities to deliver further gains, setting a target for the Stoxx 600 of 430 by the end of 2020, up 6% from Wednesday’s open.
The rise is expected to be more moderate than in 2019, and Barclays analysts identified a late-stage business cycle, overbought technicals and normalized valuations as possible risks to European stock performance.
However, a blend of light positioning, an improving macroeconomic environment and financial conditions, a mild earnings recovery and attractive valuations points to an extension of the current equity bull market, the report projected.
“Europe has marginally underperformed the U.S. year-to-date, but has closed some of the performance gap recently,” Emmanuel Cau, Barclays head of European equity strategy, wrote in the strategy report.
“For 2020, we believe that Europe and U.S. equities offer broadly similar upside, but we see the balance of risks around our constructive macro scenario consistent with a tactical preference for Europe vs. the U.S. We find current European equity valuations attractive compared to the U.S.,” he added.
Source : cnbc.com
“Indeed, European banks and other top 500 European companies have clearly been assessed below their real potential this year. several concrete effects are the cause:
1 / By their nature, European industries have always been less optimistic in their numbers and more realistic.
2 / Listed banks are aggrieved versus non-EU banks, examples: mifid 2, more complex compliances, very strict cross border rules, etc. the banks have had to reorganize themselves to attack and their stock market rises slowly but surely.
these phenomena, in addition to a fairly realistic and optimistic outlook, have made European equities undervalued and 2020 will undeniably be more productive than 2019 in Europe.” Carlos Khoury