Strategy & economics
Europe's economic recovery
Caspar Rock, Chief Investment Officer, reviews the indicators that suggest a brighter future for the continent.
The economic recovery in the eurozone is going from strength-to-strength and broadening out and this can be seen in both robust business surveys and trade activity. The eurozone’s GDP growth picked up from +2.0% in the first quarter to +2.3% year-on-year in the second, in a fifth consecutive quarter of acceleration. As a result, the European Central Bank (ECB) revised up its 2017 GDP growth estimate from +1.9% in June to +2.2% in September – the fastest annual growth since 2007.
Eurozone economic confidence rose to the highest level in a decade, with broad-based improvement across countries, while the development in trading activity (following the pick-up in global trade) points to a more self-sustaining recovery.
OUR INVESTMENT VIEWS
We upgraded European (excluding the UK) equities earlier this year, during a period when investors were highly cautious of the region due to political risks. We expected a cyclical upturn and an appreciation in the euro, as we judged that the heightened concern about the French election was overdone.
Recently, we have tempered our enthusiasm from earlier in the year, as we’ve already seen considerable investor flows. We have also seen a sharply stronger euro in the first nine months of the year. Given the relative out performance of European assets, we now see more opportunities presented elsewhere.
Chief Investment Officer
Caspar Rock joined Cazenove Capital in September 2016 and is Chief Investment Officer. He joined from Architas Multi-Manager Ltd, a part of the AXA group, where he was Chief Investment Officer and responsible for all aspects of the investment activities, including investment philosophy, process and team. He also oversaw portfolio management at two of AXA group’s private banks. He previously headed up the multi-manager business at AXA Framlington from 2006 to 2008. Prior to that, he managed a range of directly invested equity and bond portfolios, and was Head of European Equities at Framlington as well as a member of the Healthcare team. He has 29 years’ investment experience.
This article is issued by Cazenove Capital which is part of the Schroder Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements. All data contained within this document is sourced from Cazenove Capital unless otherwise stated.