Jul 30, 2020
10 minutes
Over the last five years, European equity markets have underperformed global equities (Figure 1) due to political and economic issues spawned by the GFC. Fiscal austerity, a dysfunctional banking sector and low lending growth combined to produce a slower recovery in economic activity and profitability than other parts of the world. This was compounded by persistent Brexit uncertainty, political stalemates in Italy and Spain, and US-China trade tensions. Then in the first part of 2020, COVID-19 put the brakes on economic activity. Such tough times, however, have led to bold policies.
The dramatic policy response appears to have put a floor under capital markets and laid the foundations for a recovery as lockdowns ease. As part of this three-part series, we consider current developments in Europe and why they make Europe a particularly interesting region for investors now.