Economic prospects are looking up

Last year was a relatively dull time for European equities, especially when measured against the impressive record of recent years. The main story was the extreme polarisation of returns: while defensive sectors flourished, technology and telecoms suffered severe setbacks, with the Neuer Markt Index retreating around 70% from its peak. Ironically, while the current mood is much more cautious than 12 months ago, we believe market prospects are now more encouraging. European economic prospects appear favourable, especially in comparison with the anticipated sharp deterioration in the US. Gro...