20 Feb 2019
The outlook for European stocks appears more mixed than a year ago -- with similar potential for both very good and very bad outcomes based on the macro environment.
Investors should take some comfort from the fact that valuations are much lower now than at the start of last year.
The question in 2019 is whether global economic growth will continue to slow down or even halt with corporate earnings materially affected, or will we see this year as the culmination of a soft patch for growth and a great opportunity for equity investors.
In the past few years, our outlook has generally been constructive towards European equities. In 2019, we have a more balanced view, as this year is likely to be either very good or very bad depending on how the macro environment develops. The year may be the proverbial game of two halves, with the first six months being highly uncertain and volatile as the market sentiment swings around depending on incremental data. If the market materially corrects, this could present a great opportunity for the second half.
Here are our range of likely outcomes for European equities this year.