Despite the ongoing sell off of shares, SG Asset Management still sees opportunities in European ...
Despite the ongoing sell off of shares, SG Asset Management still sees opportunities in European markets and insists equities look cheap against bonds.
Dino Fuschillo, director of European Equities at SG, explains: "An indication of the value embedded in European equities is clear by the earnings yield ratio, which, at 0.9, is at the lowest level for 20 years, with the one exception of the level it reached last October after the last sell off in European equities."
He added: "This shows that equities look particularly cheap against bonds and should be bolstered by the easy monetary stance adopted by the new European Central Bank."
Furthermore, Fuschillo reckons that the global repercussions born from the concern focussed on developments in the US economy will be short lived in Europe provided economic fundamentals prevail. He notes that continental European economies are far less dependent on the US than the UK is.
For European multinationals affected by global pricing trends, however, the message is disconcerting and unlikely to change in the short term.
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