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27 Mar 2013
Forex Flash: Positive outlook for European equities – Deutsche Bank
FXstreet.com (Barcelona) - According to Analysts Michael Biggs and Gareth Evans at Deutsche Bank, “We maintain our positive view on European equities in the medium-term. With credit growth in the euro area already negative, we believe the fundamental case for a turnaround in demand growth is strong. The turn in the credit cycle could be supported by a turn in the inventory cycle and robust global GDP growth.”
Turning points are always difficult to call, and recent weakness suggests growth could remain lackluster in the coming months. However, we would remain positive on equities if the recovery is merely delayed – to turn negative we would need to expect that euro area credit growth continue to fall for the remainder of the year.
“Central to our view is a recovery in Italy and Spain. In Spain the outlook has improved since we made our call in October – the impact of the VAT hikes has been felt and weak assets have been transferred to the bad bank. In Italy political developments have made the outlook more uncertain, but we do not believe they eliminate the chances of a recovery.” they add.
Turning points are always difficult to call, and recent weakness suggests growth could remain lackluster in the coming months. However, we would remain positive on equities if the recovery is merely delayed – to turn negative we would need to expect that euro area credit growth continue to fall for the remainder of the year.
“Central to our view is a recovery in Italy and Spain. In Spain the outlook has improved since we made our call in October – the impact of the VAT hikes has been felt and weak assets have been transferred to the bad bank. In Italy political developments have made the outlook more uncertain, but we do not believe they eliminate the chances of a recovery.” they add.