Wall Street is looking at European stocks for opportunities again, despite political risk in the euro zone.
“We’re making a lot of money in Europe because the headlines are bad but the companies are taking advantage of the situation,” said David Marcus, CEO of Evermore Global Advisors, whose Europe-heavy global value fund (EVGBX) climbed nearly 17.7 percent last year.
Investors have been cautious about investing in the continent given the Greek debt crisis that gripped markets in 2015 — again — and last June’s surprise U.K. vote to leave the European Union. The months ahead bring major elections in France and Germany, which some worry could strengthen populist voices and even threaten the breakup of the EU.
But some of the largest investment firms now say it’s time to buy Europe, especially since U.S. stocks look expensive at all-time highs and emerging market stocks have already rebounded with a 9 percent jump so far this year.
Last Monday BlackRock began recommending European stocks and downgraded its view on emerging market debt to neutral. A few days later Bank of America Merrill Lynch put out a note saying how European stocks trade at their cheapest in 40 years versus U.S. stocks. The reports follow Goldman Sachs comments earlier in the year to buy European stocks.
The argument is that European companies are increasing earnings against an improving economic backdrop.
The STOXX Europe 600 remains 10 percent below its all-time high hit in spring 2015, despite touching a 52-week high Monday.
