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European Equities – Strong Performance in 2015


Dec. 4 2020, Updated 10:53 a.m. ET

Positive performance

Stock market performance is one of the key drivers of asset managers’ revenue. This flows down to earnings and share prices. Companies that will benefit from the rise in the European equities market include BlackRock (BLK), Allianz Group (ALV), Deutsche Asset Management (DB), Vanguard, BNP Paribas (BNP), and UBS Group (UBS).

The MSCI Europe had better performance for the week ending April 2, 2014—compared to the S&P 500 (SPY). However, it was lower than the iShares MSCI Emerging Markets Index (EEM). Overall, for the YTD (year-to-date) period, the MSCI Europe returned 16%—mainly due to the quantitative easing, or QE, announcement by the European Central Bank for the purchase of $60 billion worth of debt every month starting in March 2015. The performance will sustain depending on the revival of the EU (European Union) economies and its companies’ earnings growth

Major ETFs tracking European equities—like the WisdomTree International Hedged Equity Fund (HEDJ) and the Vanguard FTSE Europe ETF (VGK)—also generated good returns for investors.

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Recovery is key for markets

The EU (EFA) has been laggard in terms of economic recovery for the past few years—compared to the US market. However, the QE announced by the EU is impacting the region’s key economic numbers. The inflation and economic data saw some uptick. Through the announced program, inflation is expected to reach 2%.

Major factors that could affect the performance of EU equities in 2015 include:

  • The strong dollar could help export-driven economies in the EU.
  • Full QE, as announced by the EU, should help banks and industries.
  • Expected low rates for the next few quarters should help combat deflation fears in economies outside Germany.

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