Morgan Stanley kommer med en positiv prognose for aktieudviklingen i Europa. Banken tror, at aktierne vil stige med 7 pct. i år – mere end S&P-indekset i USA – og når dividenderne lægges til, vil det give en værdistigning på 10 pct. Og så mener banken, at det kan være en for konservativ vurdering. Banken tror ikke, at Omicron vil få nogen større negativ virkning. Det, der snarere kan påvirke aktierne, er en pengepolitisk stramning, men banken tror ikke, at ECB vil stramme kursen i år. Morgan Stanley ser en større stigning af value-aktierne end af vækst-aktierne i Europa, dvs. banker, råvarer og bilproducenter.
Will Europe be Derailed by Omicron?
Despite last year’s strong showing for European equities, will the recent spread of the Omicron variant derail our positive outlook for region in 2022?
True European equities did lag US stocks again in 2021, however, this is hard to avoid when global markets are led higher by technology shares given Europe has fewer large cap companies in this space. More impressive was Europe’s performance against other regions such as Japan, Asia and emerging markets.
In fact, when we measure the performance of MSCI Europe against the MSCI All Countries World Index, excluding U.S. stocks, then we find that Europe enjoyed its best year of outperformance since 1998 which, to provide some context, was the year before the euro came into existence.
However we do expect another year of positive returns for European stocks in 2022, with 7% upside to our index target in price terms, which rises to 10% once dividends are included. This is considerably better than our Chief US Equity Strategist, Mike Wilson, expects for the S&P, while Jonathan Garner, our Chief Asian Equity Strategist, also remains cautious on Asian and emerging markets at this time.
While we think the underlying assumptions behind that positive view on European stocks are actually quite conservative – we model 10% EPS growth and a modest PE de-rating – equity investors are likely to have to navigate greater volatility going forward, given scope for higher uncertainty around COVID, inflation, and the impact of tighter monetary policy on asset markets.
The first of these factors was arguably the most important for markets through November and December, however, recent evidence that emerged very late in the year – that Omicron is indeed considerably less severe than prior mutations – has boosted risk appetite across the region, helping push bond yields and equity prices higher.
From a more fundamental perspective, we are also encouraged that the sharp rise in COVID cases across Europe over the last couple of months does not appear to be having a significant impact on the economy. Yes, we did see quite a sharp drop in business surveys in Germany through December, however, this doesn’t appear to be replicated elsewhere with the PMI services data in France and consumer confidence data in Italy staying strong for now.
Going forward, we expect the driver of volatility and uncertainty to shift from COVID to central banks and the impact of tighter monetary policy on asset markets. While this issue will be relevant across all global markets, Europe should be less negatively impacted than elsewhere given the European Central Bank is unlikely to raise interest rates through 2022.
In addition, the European equity market’s greater exposure to the more value-oriented sectors such as commodities and financials, should make it a relative beneficiary of rising bond yields, especially if – as our Macro Strategy team forecast – this is accompanied by rising real yields (which should weigh most on the more expensive stocks in the US) or a stronger US dollar (which is more of a headwind for emerging markets).
Consistent with this outlook, we maintain a strong bias for value over growth here in Europe, with a particular focus on banks, commodity stocks and auto manufacturers. While all three of these sectors outperformed last year, we think they are still cheap and hence offer more upside from here.
