Investors’ perception of the opportunity in European equities has been clouded, but in reality we believe the region is an exciting place to invest. The currency weakness that affected recent European stock performance is, in our view, a short-term story and should not influence one’s investment approach.
Additionally, we hold that developed international indices are a poor representation of Europe’s future value and require an active manager to provide exposure to higher potential growth areas of the economy.
Despite recent setbacks, the European market’s strengths, including its many innovative companies and brand leaders, make it a compelling long-term investment opportunity. We point to four key characteristics that make it so:
Market size
Europe remains the second largest investment region in the world. Europe will continue to provide a liquid platform for investors to access equity investments. It’s a market that encourages shareholder friendly practices and business growth.
Strong brands and businesses
Many valuable brands and companies call Europe home. Europe is the leader in many innovative industries and home to many brands with a high degree of loyalty. These companies offer a compelling investment opportunity through all market environments.
A currency boost for exports
Weak currencies are good for exports. Europe is a major trade partner for the United States and the emerging markets. Following three years of a sharp devaluation in the euro and pound, European goods and services have become cheaper for foreign countries.
Improving economic data
Key economic data have been improving for several years and by the end of 2016 were back above pre-recession levels for most major European economies.
Learn how we challenge perceptions with Oppenheimer International Growth Fund.
This article was produced by OppenheimerFunds and not by the Quartz editorial staff.
Foreign investments may be volatile and involve additional expenses and special risks including currency fluctuations, foreign taxes and political and economic uncertainties. Emerging and developing market investments may be especially volatile.
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