The MSCI EMU index of euro-zone equities outperformed the MSCI USA index via a lot of the first quarter of 2021. Nonetheless, since April, eurozone equities have misplaced floor in opposition to their US friends once more. Whereas economists at Capital Economics count on the financial restoration within the eurozone to be slower than that within the US, they nonetheless anticipate that the MSCI EMU will outperform the MSCI USA within the the rest of the 12 months.
MSCI EMU to rise by ~3% between now and end-21
“We expect the rotation in direction of sectors that have been hit exhausting by the pandemic, like power and financials, will resume.”
“We count on the hole within the efficiency of particular person sectors between the US and euro-zone to slender because the euro-zone economic system progressively reopens later this 12 months. Whereas numerous excellent news on the economic system seems to be already discounted within the US, we suspect this will not be the case within the eurozone.”
“We anticipate that within the US the prospect of upper company tax charges and presumably, an rising focus of regulators on anti-trust points, might be a headwind for equities.”
“We expect that valuations might improve considerably within the euro-zone as urge for food for threat rises additional, however not within the US, the place they often look extra stretched.”
“We forecast the MSCI EMU to rise by ~3% between now and end-21. This compares with a projected improve of lower than 1% for the MSCI USA.”