FXStreet reports that economists at Morgan Stanley see four reasons why European equities could continue to outperform global peers.

“The economic data across Europe has come in considerably better than expected. Looking forward, one consequence of the initial delay in Europe’s recovery is that there is further room for improvement in some of the key economic indicators over the summer months.”

“The European stock market is very global in nature, with European companies also benefiting from the strong growth all around the world. So far this year, consensus earnings forecasts for 2021 have risen by over 5%.”  

“Europe’s so-called ‘unloved’ characteristics mean that the region looks considerably cheaper than global peers and investor positioning is much more muted.”

“The European Recovery Fund should get the green light soon. These monies should both boost the underlying economic growth, especially in the periphery, and further reduce political risk premium. If this, in turn, piques investor interest back towards the region, then this could be a powerful catalyst for further outperformance ahead since global flows are often a key marginal driver of European equity performance.”