Excerpt from South China Morning Post quoting DataTrek Research:
….. “Other fund managers point to Europe as an alternative to pricey US stocks, partly because of this year’s sharp decline in the euro – the more than 7 per cent fall versus the dollar since mid-April benefits the region’s exporters – and the start of an interest-rate-hiking cycle in the euro zone next year, which should help the bloc’s banking stocks. However, renewed concerns about Italy’s commitment to the euro – amplified by the expected end of quantitative easing in the bloc in December – make euro-zone shares a risky bet.
This is why the case for convergence within global equity markets is unconvincing. As DataTrek Research, a US consultancy, rightly observed in a note published on Monday, “while non-US equities may look cheap on a valuation basis, investors have been cautious in trying to pick a bottom in either [Europe] or emerging markets”.
While the momentum behind the “America first” trade is slowing, the strength of the US economy and corporate earnings –both turbocharged by President Donald Trump’s corporate tax cuts – outweigh concerns about stretched valuations. What is more, US equities continue to benefit from the prominent role played by America’s technology giants in powering the rally, in stark contrast to Europe, where the tech sector is almost non-existent in stock markets”…..
Read the whole article here in South China Morning Post!