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BlackRock is turning more positive on Europe, saying that investors generally are “too sceptical of the region’s prospects” while company analysts are unusually upbeat.
In a note on Tuesday, chief investment strategist Richard Turnill says that without other major shocks, the global trend towards reflation should be supportive to European equities.
BlackRock has bumped the sector up to ‘overweight’ as a result. Many investors, though, are hung up on politics.
We believe the political risk priced into European markets around upcoming French and German elections is overstated. A likely Italian election may prove to be a populist flashpoint, but the major risk to our view is that a global slump cuts short the reflation trend.